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Injecting new dynamic to overcome difficulties


The Belt and Road Initiative could help Chinese companies address the teething problems they have encountered in Latin American and Caribbean countries

Latin American and Caribbean countries cover an impoverished and unstructured region with significant potential wealth but a highly unequal income distribution. China has a plan to the extent of becoming an interlocutor and giving the countries one voice as the Community of Latin American and Caribbean States.

This political importance for China does not find a correlation in the economies in the region, which seem unsure about their agenda or what they can put on the negotiation table in exchange for what China offers. On the other hand, these countries' relationship with the United States and Europe from the very moment of the constitution of the nation states, was decisive--they were delineated as economically dependent countries with a low degree of institutionality, giving rise to fragile democracies that are politically dependent on the hegemonic center.

Viewed in relation to the framework of Latin American and Caribbean countries' relations with the developed West, China is certainly not like the US, which considers Latin American and Caribbean region its "backyard". This aspect is an open debate that took off in Latin America especially in the first decade of this century, as the international prices of the commodities that make up the classic basket of exports of Latin American and Caribbean countries soared.

Recent political developments in the Latin American and Caribbean countries leave one in no doubt that it has become a disputed region which is losing opportunities with China as well as with the world.

What is interesting is China has overcome its initial shyness and is taking advantage of the US retraction to be more forward, and it is in this light that China should include in the joint CELAC-China declarations a specific chapter on the Belt and Road Initiative.

China's presence was and is shocking for many sectors and industries in Latin American and Caribbean countries, but its motivation, strategy and procedures are not always properly understood. In the same way, Chinese companies still need to gain understanding of the context in which they are going to develop their business in Latin America and of the opportunities that the region offers. The eventual deployment of the Belt and Road Initiative should consider that not all Chinese projects in Latin American and Caribbean countries have been successful.

The investments in these countries are barely more than a decade old and as each sector and economy presents its own dynamics, the role of local partners is especially important. The Chinese presence has caused changes in almost all the markets in which they have tried to establish operations.

This was and is still the case, both in the entry phase of Chinese companies and in the conducting of their operations once they are in business. Ignorance stimulates mistrust and also generates concern and disputes about labor issues as well as the impact their actions have on local communities. These aspects are fundamental to the Chinese experience in Latin American and Caribbean countries and imply the physical presence of Chinese companies is injecting a new dynamic in the region.

It has created new imperatives for the Chinese government to exercise its growing influence to help its companies and staff, and use its newfound soft power to ease political and managerial pressures on these companies.

On the other hand, there are important differences in the organizational cultures of Chinese companies and their local partners, which are manifested in their relations with the local workforce and subcontractors, and their relations with the authorities where the operations are carried out.

The political and civil society expectations, and the different work culture have made it difficult for Chinese enterprises to establish ties with the community where they are trying to set up shop. In this regard, one of the first steps to pave the way was taken in 2017 when Chinese Premier Li Keqiang proposed a"3x3" model to boost China-Latin America collaboration, which proposed boosting capacity in the logistics, infrastructure, energy and information sectors.

China might be willing to play a greater role in financing in infrastructure projects in Latin American and Caribbean countries, if these countries showed greater openness and willingness to participate in the Chinese initiative.

Latin American and Caribbean countries are complementary to China in the commercial field and the content of the trade flows shows this, but the Belt and Road Initiative seems to catalyze other non-commercial complementarities, such as the requirement of Latin American and Caribbean countries for technology (knowledge), capital (financing) and infrastructure (engineering), which are precisely the three elements that make up China's surplus supply.

The author is a professor at the National University of LanĂºs (UNLa) in Argentina and the author of How Did the Chinese Do It? Some of the Causes of the Great Development of the Asian Giant. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.