Expo 2010 Shanghai: Latin America’s Opportunity

On 1 May China welcomed the world as the host of the World Exposition (Expo) – officially named Expo 2010 Shanghai，China.

Initially used as a way to showcase the powerful British Empire under Queen Victoria in 1851，the Expo now serves as a coming-of-age party for nations seeking to establish themselves as power players in the global economy. This year’s venue in Shanghai reflects the ever-increasing importance of Asia，and of China in particular.

A global event

China’s role as a global economic power is not in doubt. Yet，the benefits of this international event may be greater for nations still pushing to be labelled relevant in the world market. For this reason，many Latin American nations have prepared themselves for the Shanghai Expo，not only to seduce the Asian giant，but also to promote their respective nations to the rest of the world in an effort to attract capital and tourism.

Just two years after the Beijing Olympics，China is again playing host to a global event. China understands the importance of keeping its borders open and inviting the rest of the world – by trade，investment，and culture – to flow in and out of its borders. As the past decade has illustrated，Latin America has provided support for some of China’s insatiable needs. It appears likely that the next decade will follow this same path.

Sino-LatAm trade

China has embraced Latin America’s ability to produce and supply goods that are scarce in Asia. With the ability to fulfill China’s immense need for soya beans，lithium and crude oil，Sino-LatAm trade continues to increase – with many long-term deals recently signed in an effort to satiate China’s demands.

For example，last month，the offshore-oil producer China National Offshore Oil Corporation agreed to pay US$3.1 billion to form a joint venture with the Argentine energy firm Bridas Energy Holdings. The venture was formed with a view to future exploration and production of oil and gas in Argentina，Bolivia and Chile.

As well，the state-owned petroleum group PetroChina signed several new accords with Venezuela，anticipating China’s importation of over 500,000 barrels of oil per day and containing another provision offering over US$1 billion in Chinese credit for Venezuelan mining projects.

China has also signed on the dotted line with Ecuador，agreeing to lend more than US$1 billion to build a hydroelectric power plant，and with Brazil’s national oil company，Petrobras，for US$10 million to be used for oil exploration. In Bolivia，Chinese investors have arranged for the payment of nearly US$8 billion to fund a new highway system and rail links connecting Tacna to El Mutun for the sole purpose of mineral exploration.

Even Chinese banks，including the Bank of China and the China Construction Bank，are looking to pursue an international banking strategy that involves lending to Latin America. China’s investment in Latin America’s soya bean production – primarily out of Argentina and Brazil – is also worth mentioning since it topped US$10 billion in value last year and continues to grow.

Latin American nations welcome the opportunity to fulfil some of China’s needs，and potentially to boost Latin America’s infrastructure by means of China’s deep pockets. With bilateral trade between the two regions predicted to reach US$100 billion by the end of this year，this new interdependence between China and Latin America not only illustrates the growing bond between them，but also creates new，exciting and profitable business endeavours for investors seeking new markets.

Latin America at Expo 2010

Latin American nations and investors now enter the Expo seeking to strengthen Sino-LatAm business relations.

As well，these Latin American nations look to open their arms to the other 188 nations in attendance. Five Latin American nations have assembled independent pavilions within the Expo: Mexico，Venezuela，Brazil，Cuba and Chile. However，these nations represent only a small number of the Central American，South American and Caribbean nations that have marked their spot within the various pavilions.

In promoting their cultures，planned development，trading power，and consumer power，these nations continue to search for foreign investment and capital from the world’s leading players.

The Mexican pavilion，measuring half the size of a football field，has received an average of 12,000 visitors daily，demonstrating the interest Latin America is generating in China. Certainly，China seeks to tap into Mexico’s abundant lithium and precious metal deposits. Mexico，on the other hand，would welcome new capital investment to further develop its infrastructure.

Similarly，big business is flourishing within the Brazil pavilion. Brazil，now a major exporter of agricultural and raw materials to China，continues to welcome China’s deep-pocketed investors. Just this month，Chinese state-owned energy company Sinochem signed another deal allowing continued off-shore oil drilling off the coast of Brazil.

Declaration expected

As the Expo moves forward，each Latin American nation will display its potential to help fulfil China’s seemingly unquenchable desires. They do so with the understanding that their respective nation must engage with China，or risk being left behind in the global economy.

Before the conclusion of the Expo in Shanghai，a joint declaration will be issued. This declaration will epitomize the insights offered by global participants in the Expo，and embody the ideas and innovation gained from this international event. This declaration will also serve as further evidence of the importance of China as a trade and business partner for any nation seeking to reach its full potential. Latin American nations understand this – as demonstrated by the thirty Latin American nations present at the Exposition.

Sumeet Chugani and Ricardo Ortiz are associate attorneys at Diaz Reus & Targ