Date
17 August 2017
Mario Artaza
Mario Artaza

INTERVIEW: Chile looks beyond copper to boost exports to China

Chile, the world’s largest exporter of copper, is seeking to diversify its exports to China by adding seafood, fruits and red wine to its traditional shipments of copper to the Asian economic giant, a senior diplomatic officer of the Latin American nation said.

It also wants to use Hong Kong as a stepping stone to enter lower-tier cities in the mainland, Mario Artaza, Chile’s consul general to Hong Kong and Macau, told the Hong Kong Economic Journal’s EJ Insight in an interview.

In 2012, copper and iron ore took up more than 85 percent of its exports to China, while fruits and wine accounted for only 2 percent, data from Chile’s central bank showed.

But things have started to change. In the first half of 2013, it exported US$503 million worth of agricultural products to China, more than five times the amount for the same period in 2010. Its seafood exports to China reached US$106 million, double the amount three years ago, while wine shipments jumped 93 percent to US$72 million, according to the central bank data.

“We aim to support endeavors to feed China’s growing middle class who is actively seeking new products of high quality, products that the Chinese people can trust,” Artaza said.

“We would also like to add value to what China is eating. Geographically, Chile is located in the southern zone so when it is winter in China, it is summer in Chile. This means Chile can produce fruits and other food products that China needs but does not have because they are off-season. That makes us complementary.”

Trade between China and Chile reached over US$30 billion in 2012, up 4 percent from the previous year and a huge increase from US$4-5 billion in 2005, according to data from Chile’s central bank. China accounted for 21 percent of Chile’s total exports for that year. Trade with Hong Kong reached over US$1 billion in 2012, the Hong Kong’s Census and Statistics Department said.

In fact, Chile has started to cut down its copper exports to China. Shipments to the country by state-owned copper producer Corporación Nacional del Cobre de Chile (Codelco) accounted for 32 percent of the company’s overall exports in the first half of 2011, down from 42 percent a year earlier, according to a Chilean newspaper report.

For the same period, its exports to other Asian countries except China rose 7 percentage points to 24 percent while those to Europe grew to 23 percent from 19 percent.

The report also cited a study by Chile’s mining ministry and state copper commission Cochilco that the country will focus on exporting copper to other emerging markets such as India.

Several Hong Kong-listed Chinese firms have done business with Chile in the past years, including Pacific Andes International Holdings Ltd. (01174.HK), Aluminum Corporation of China Ltd. (02600.HK) and MMG Ltd. (01208.HK).

Meanwhile, Chile wants to encourage technological investments from China. “About 70 percent of the new investment in astronomy in the world is done in Chile because we have the world’s clearest skies. There are already a number of investments from Europe and we are hoping China’s first astronomical center in Latin America will be located in Chile,” Artaza said.

So far no such investment is being discussed, “but the two countries have recently signed an agreement with regard to increasing cooperation on astronomy”, he said.

In early October, Chile’s National Commission for Scientific and Technological Research (Conicyt) and the Chinese Academy of Sciences (CAS) signed an agreement establishing a US$3 million annual fund for joint astronomical research.

The fund, to be implemented from 2014, will be used for joint training and research programs, the official Xinhua news agency reported on Oct. 4, citing a statement by Conicyt president Mateo Budinich. The two countries also agreed to establish a Joint Center for Astronomy in the Chilean capital of Santiago, the first CAS scientific institution outside China.

“Astronomy is a starting point, our collaboration can be extended to other fields,” CAS president Bai Chunli {白春禮} said. “I am confident that our cooperation in astronomy will have a positive impact on our bilateral partnership in science and technology.”

Chile signed a free trade agreement with China back in 2005, and followed this up with a free trade deal with Hong Kong in September 2012.

“Chile is now mainly working on first-tier cities and the coastal regions of China, but we want to get into the lower-tier cities as well as the western part of the country,” Artaza said.

Stepping stone

Artaza believes Hong Kong can help Chile to deepen its relations with China because the city is constantly identifying and exploring new areas of interaction with the mainland market. 

“Entrepreneurs in Hong Kong know more about China than we do so we want to work on that with Hong Kong,” he said.

“We see Hong Kong as a stepping stone to China and the Asia-Pacific region, while Hong Kong can in turn treat us as a gateway to the Latin American countries.”

As part of efforts to strengthen ties with China, Chilean lender Banco Security S.A. will open a representative office in Hong Kong in the first quarter of this year, after another Chilean bank, Banco de Chile, set up an office in Beijing six years ago.

“We would like to seek a new customer base for exporters and importers of the two economies to broaden our bilateral trade in services and goods,” the consul general said.

Chile is also discussing with Hong Kong a working holiday scheme which is likely to be launched this year, he said.

By sending its youth to work in Hong Kong, Chile hopes to gain a deeper understanding of the China market and get to know how to do business with Chinese entrepreneurs, Artaza said.

– Contact the reporter at [email protected]

CG 

Ayishah Ma is a financial reporter on Greater China issues.

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