Foreign money flowing into a new region often first goes into buying natural resources because it is a simpler business than making things, which requires dealing with labor, setting up supply chains and complying with various government rules, he said.
Hanwha, a South Korean petrochemicals company, is considering manufacturing in Latin America rather than continuing to concentrate its production in China, said Sang M. Lee, chief executive officer of the company’s US operations.
At the same time, the company is eyeing the Latin American market, especially as it moves into solar energy, Lee said after a Wednesday morning at the World Economic Forum dedicated to the future of Asian-Latin American relations.
“We need that new production because there are a lot of resources in Latin America, and we need more markets,” Lee said. “We’re just at a beginning stage with this.”
Yet to be seen is whether the rising Asian investment will quiet concerns in Latin America that exporting commodities while importing manufactured Asian goods will ruin domestic companies and leave the region vulnerable. Brazil, in particular, has raised import tariffs on manufactured goods to protect its own industries.