A Chinese investor in his image – 07/29/2021 – Tatiana Prazeres

When Ford this year announced it was shutting down operations in Brazil, governors looked to China to look for companies interested in the facilities that would be left behind.

When Mercedes announced the closure of the factory inside São Paulo, attention also turned to the Chinese.

Not without reason. In a short time, China has positioned itself as one of the biggest investors in Brazil.
The interest of Chinese companies has widened over the years.

The first wave of investment, until 2010, was aimed at ensuring access to basic commodities, such as petroleum, minerals and soybeans.

In a second step, the Chinese also started to see Brazil as a consumer market and thus invested in the industrial sector, such as cars, motorcycles and air conditioning equipment.

The third wave was marked by investments in services, particularly in the financial field and in application transport. Then, in the fourth phase, there were major operations in electricity and infrastructure in Brazil.

Although the trajectory suggests diversification, investments are concentrated in the energy sector, particularly electricity and oil, which accounts for 76% of the total value, according to a study by the Brazil-China Business Council (CEBC) to be released August 5.

Several analysts expected that with the economic crisis associated with the pandemic, China would expand its investments abroad. So it was in 2008, when the financial crisis devalued assets around the world and increased Chinese appetite for bargains.

Now, however, even with the popular currency, the Chinese haven’t gone shopping, much to the frustration of many. Since its heyday in 2016, China has become smarter when it comes to investing abroad, not least due to new legal requirements. In 2020, it kept the flow of investments abroad at a high level, but it did not increase as in the previous crisis.

Instead of investing more, China is reassessing its strategies and letting go of the accelerator. Reconsider projects even in the context of the New Silk Road. At the same time, due to geopolitical tensions, Chinese investment has met more resistance in countries like the United States, Australia and even in Europe.

In addition, companies in various sectors see good opportunities in the Chinese market itself – which in 2020 was the world champion in attracting foreign direct investment (FDI). While global flows have fallen by more than 30%, FDI to China has increased. The perception of many Chinese companies is that the best deals are found in the country itself.

When in 2019, the Brazilian government was looking for foreign investors for two pre-salt auctions, Bolsonaro used his visit to China to promote the projects.

Holding an auction soon after would reveal that, without Chinese companies, no foreigner would be interested in investing.

In 2018, the then candidate declared that China did not want to “buy from Brazil”, but rather wanted to “buy Brazil”. It didn’t take long for him to come to Beijing to seek more Chinese investment. Scenes in the following chapters include the unfolding of the privatization of Eletrobrás.

Today, of the Federation’s 27 units, 23 have Chinese investments, according to the CEBC study. Attracting investment is a major objective of governors in their contacts with China.

It was like that before the pandemic, it’s even more like that now. The flow of FDI to Brazil fell by 62% in 2020, according to Unctad. And it is precisely in difficult times that these investments are particularly needed.

Everyone wants a Chinese investor to call their own – even Bolsonaro, reluctantly.

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