Investments by Chinese firms in Brazil total over $ 29.5 bn in 2010

Mar 31, 2011 12:00 AM

Investments by Chinese companies in Brazil exceeded $ 29.5 bn in 2010, according to a study by the Brazil-China Business Council (CEBC), presented in Brasilia, during a meeting about Brazil-China Economic Relations.
The figure includes not only investments made in 2010, which accounted for 44 % of the total or $ 12.9 bn, but also announced investments (27 % or $ 8 bn) and those that are being negotiated (29 % or $ 8.6 bn). The biggest deal last year was the acquisition of 40 % of Repsol Brasil by Chinese state oil and gas company Sinopec, for $ 7.1 bn.

The operation between the oil companies is included in the category of mergers and acquisition, which has been the preferred method for Chinese companies in Brazil, similarly to China’s presence in other countries such as France and Italy, according to the CEBC. This kind of investment accounted for approximately 83 % of China’s investments in Brazil.
Meanwhile partnerships accounted for 11.5 % of total Chinese investments in Brazil, with a significant example of this being funding of $ 3.5 bn by the Wuhan Iron Steel Group to set up a partnership with the EBX group, owned by businessman Eike Batista, to install a steelmaking plant in the north of Rio de Janeiro state.

The third type of investment, in which a company invests in construction of a factory in another country in order to have a production base there, accounted for 5.2 % of the total.
One of the best-known examples is that of automotive company Chery, which invested $ 400 mm in a factory in the interior of Sao Paulo state.

Chinese investments in Brazil are principally focused on the energy, mining and steelmaking sectors according to the CEBC study, which sourced its information from press reports and company interviews.
Together, these three sectors accounted for 88 % of all the resources invested by China in Brazil.

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