Opinion And Analysis

Chinese startups look towards untapped Latin American market

By Silvia Castro Betancourt 0 Comments NEWS, Opinion And Analysis

Tang Xi, founder of Chinese startup Inveno, didn't even know of Mexico a couple of years ago. Now its application 'Aguila News' has more than 20 million users and has become the new number one application of the Mexican store of Google Play in 2017, according to App Annie. It's a success that happened for Tang while he worked for the technological giant Tencent and his development team maintained their headquarters in Shenzhen, the Chinese innovation center that is located on the border with Hong Kong.

Inveno is part of an emerging group of Chinese developers and investors who bet that the new "technological gold rush" will come from Latin America and its more than 600 million inhabitants.

Chinese venture capital investment in Latin America has increased to 1 billion dollars since the beginning of 2017, compared to around 30 million dollars in 2014, according to data from the British firm Preqin.

Driven by venture capitalists from the continent and successful in Latin America, Tang - who is 40 years old - and his peers export a formula perfected in China in the search for rapid expansion above profitability.

"Before, China copied from abroad, but now we see more opportunities in helping to replicate business models that have taken off and export them," said Tang, who currently spends a quarter of his time in Mexico. "Competition is so strong in China that smaller companies believe that looking for opportunities elsewhere makes sense."

Among the Chinese startups that arrive in the region are Tian Ge Interactive, which is based in Hangzhou and wants to create a collective funding internet platform in Mexico. Phonemaker Transsion, phone manufacturer firm, which is preparing to establish operations in Colombia. China Mobile Games & Entertainment Group, which plans to distribute mobile games in Mexico. And Ofo, the Beijing-based bicycle sharing service that is preparing to make its first foray into Latin America in Mexico, said Chris Taylor, who runs the company's operations in the United States.

The path of startups takes advantage of years of Chinese state investment in infrastructure in Latin America, where in January some 2,000 companies invested more than 200,000 million dollars.

However, the companies will not have the region earned. As in the case of Chinese investments in the region's infrastructure, analysts point to the possibility of local opposition. An example is the path of Chinese automotive companies to establish themselves in countries like Brazil even after having built local plants.

But the difficulties have not discouraged the interest to invest. Alibaba Group and Tencent seek projects, while Didi's acquisition of Brazil 99 demonstrated the possibility of quick transactions, unlike the recent political opposition with which Chinese companies face in the US.

The above article was written and published in Spanish and has been translated into English. Click here to read the original article.

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