China, the great opportunity for Argentine companies …

Because of its sustained growth dynamic and the size of its market, China is still a great opportunity for companies that are dedicated to exporting. This is the customer that everyone wants to have. In the case of Argentina, China is the second largest export destination, behind Brazil, with chances of continuing to reduce the distance in the short term depending on the possibilities of larger livestock shipments. But beyond the relevance of the Asian giant in Argentine sales, it is a market where it is difficult to penetrate: investments measured in dollars are currently below the 2008 marks, which implies a sharp drop in participation. Argentina in the Chinese market. Apart from basic products linked to agriculture, it continues to be a very difficult destination to access.

Overall, China last year recorded imports of $ 2.06 trillion ($ 2 trillion), the second largest importing economy behind the United States., with 2.33 billion. The Asian giant will eventually take first place before 2030. The countries that sell the most to China are South Korea (around 10% of total Chinese imports), Japan, other Asian countries and the United States. The products that China imports the most are integrated circuits, valued at around $ 310 billion, followed by petroleum and its derivatives, iron ore and raw gold in non-monetary form.

China accounted for 10% of Argentina’s overseas sales in 2020, surpassed only by Brazil, which accounted for 15 percent. Argentina exported $ 5.394 billion to China last year, down from $ 6,355 million in 2008, at the height of the commodities boom. Without counting the pandemic effect, the result is similar, since in 2019 sales to the Asian giant were 6,325 million.

However, in the same period that Argentina’s investments to China were stable at the best of times, China’s total imports have seen a shocking rise: from $ 1.13 trillion to $ 2.06 trillion today. hui. In other words, Argentina has sharply lost Chinese market share.

In 2011 and 2012, the number of companies that sold to the Asian giant was 748. In 2018, this number was 696 companies and in 2019 783 companies, growth based on the new dynamism of meat packing companies who ship beef. This allowed the average turnover per company to reach $ 9 million, for the first time to exceed 8.1 million in 2011.

What do we sell to China

In 2019, Argentina’s top exports to China include soybeans ($ 3.013 million), frozen beef (2006 million), frozen shrimp and shrimp (264 million), frozen chicken pieces (191 million), crude petroleum oils (172 million)), soybean oil (162), frozen squid (117 million), and peanut oil ($ 98 million).

Argentina ranks third as China’s soybean supplier, after the United States and Brazil. At this point, it is the country’s “traditional” export to China. However, the most dynamic element of recent times is the beef. In 2015, 41,000 tonnes of chilled, frozen and processed meat were shipped to the Asian country. In 2020, shipments to China amounted to 462 thousand tonnes, ten times what was exported in 2015. Beef deliveries to China, with an average value of $ 3,713 per tonne, enabled the entry of $ 1,716 million last year.

Government and private sector are now pointing potato chips at pork, if Chinese capital farm investment project thrives large size for overseas market. Currently, pork deliveries to the Asian country are around $ 69 million and could rise to around $ 2 billion per year after six years of investment maturing, consultant Juan Uccelli calculates.

Outside of the major categories, the increase in sales to China is recorded in no time, despite the undeniable opportunity represented by the Asian market. “To take advantage of the opportunities offered by China’s growing middle class, you have to go out and sell, it’s a big push to sell to China. The market is not easy and the first difficulty is to befriend the Chinese buyer. They need to see that the supplier is someone they can trust. In fact, sometimes the quality and the price of the product are of secondary importance to the personal relationship. It is expensive for SMEs, it is another way of doing business and it is also different from soybeans and meat, which the Chinese come to seek. Outside of these areas, the Chinese will not come to buy, they have to go and sell and the key is something they call Guanxi, “interpersonal relationships of mutual benefit,” ”he told PageI12 Ernesto Fernández Taboada, Executive Director of the Argentine Chinese Council.

Guanxi

“I write to my Chinese clients for their children’s birthdays and they have invited me to the 15th daughter of the owner of the company party. It is extremely necessary ”, graphic Carlos Camps, vice-president of the Argentinian company Indelval. It is a family-owned SME that manufactures rubber floors for hospitals, building entrances, buses and trains.

“In 2004, we signed our first sales contract in China. Since then we have already built around 35 hospitals, six or seven power plants and libraries. Our product competes for European design and quality, we never compete with Chinese product. Our price target is to be between 10 and 15 percent below the Germans, they have opened up this market to us, along with the Italians, ”Camps explains.

The businessman clarifies that the Chinese costs are lower, but that there are a few factors which allow Argentina’s competitiveness. “We have a specific and complex design, a different level of quality and we comply with the most demanding regulations in hospital construction. But there is also a relationship of trust that we have built over so many years. They came here and we take them on sightseeing all over the country, they’ve gone mad with Argentina, ”he adds.

Camps points out that today, competition in China is even higher than it was fifteen years ago, because while Chinese costs have reached levels not so far removed from those in Argentina, there is also a evolution in the design and presentation of products.