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China has been fiercely growing during the past decades. Soon enough, this giant will be the top world economic power. The country’s diplomacy strategy relies on slow but gradual gestures that allow them to gain ground via investments. Thus, China is reaching an important position in Latin America and the world, displacing–in some cases–traditional leaders in the region such as the U.S. and Europe.
But Latin America has not always been a priority for China. Instead, the country had mainly focused its efforts in leading trade markets like Africa and accessing U.S. and European markets. However, times have changed and China has been erupting forcefully into the region and forging new relations with countries such as Panama, Brazil, Argentina, Bolivia, Venezuela, Cuba and Nicaragua.
China had previously been a buyer of commodities in Latin America, boosting exports in many countries. It has also exported many of its products to the region. But China’s Achilles heel is the weak–or lack of–political or economic influence in Latin America… or is it?
Central America had previously had strong relations with Taiwan, but since Costa Rica’s former President, Oscar Arias, announced the break in relations with Taipei and the recognition of the People’s Republic of China, the situation has drastically changed. Panama followed Costa Rica’s steps, but it was only a matter of time since China was the second-largest user of the Panama Canal, accounting for 18.9 percent of total cargo transported (38 million tons), in the past financial year. China is also the main supplier of goods for the Colon Free Trade Zone, proving just how strong the country is becoming in the region.
What happened in Panama suggests Latin America will see in China a new and growing market, which will help reduce its trade dependence on the United States.
Despite of the strong economic power, China has not yet achieved to fully seduce the governments and public opinion in most of Latin America. The country perceives itself as a provider of goods and funder of projects–not so much a builder of strategic relations. But if China wants to be recognized as the leader, it needs to work on its reputation and win the challenge upon.
Every company knows that it is no longer enough to have good products and services–luckily Chinese companies have improved in this area–but to actively engage with communities. If China wants to succeed as a leader in every aspect–political, economic and as a manufacturer–its companies must begin to engage with local culture and audiences for the improvement of their image, reputation and relationships, in order to solidify itself and become more strategic. The main challenge the country faces is building itself a “brand image” in Latin America that positions it further forward than any other brand. What this means is that is necessary to create value for the communities and territories where Chinese products are present in.
The only way to achieve such goal is through conversation and interaction with the people, and making companies’ offerings transparent and understandable–an entirely different challenge than money-making. .
Chinese companies and products must become part of a community and project a more human image. They have to be able to create positive experiences and highlight functional and emotional benefits connecting the brand with the emerging of social values.
The goal is to encourage consumers and customers to perceive the brand as aspirational. This task is not easy, but it is essential, especially if China wants to be the ultimate leader in Latin America.
*Summary of the article written by Javier Rosado, Partner and Managing Director of LLORENTE & CUENCA Panama, and Pau Solanilla, Managing Director for Cuba and Senior Director in Panama at LLORENTE & CUENCA, published in Developing Ideas
