Chinese business investment in Brazil falls by 75% in 2018

11 January 2019

The investment made by Chinese companies in Brazil in 2018 fell by 75.5% to US$2.761 billion, the Brazilian Ministry of Planning, Development and Management said in Brasilia.

The latest edition of the Bulletin on Chinese Investments in Brazil prepared by the Department of International Affairs of the ministry said that the year-on-year drop is due to the fact that 2017 was the peak of investments by Chinese companies in Brazil.

Although Chinese companies invested US$2.583 billion in mergers and acquisitions last year and US$178 million in core projects, in 2017 those figures amounted to US$11.298 billion and US$8 million, respectively.

The bulletin, however, draws attention to the fact that a publication by the Brazilian Central Bank – Brazilian Direct Investment Report – states that in 2017, when Chinese investments reached their highest value, China was only the ninth largest foreign investor in Brazil.

In the period from September to December 2018 four investments of Chinese companies in Brazil were confirmed, with two projects – Tencent Holding and China State Grid – mergers and acquisitions and two others – Anhui Zhongding Holding and Gree do Brasil – from scratch.

Tencent Holding, owner of the WeChat application, invested US$180 million in a 5.0% stake in Brazilian financial technology company Nu Pagamentos As – Nubank and state-owned China State Grid concluded the tender offer for the remaining CPFL Energias Renováveis shares.

Through this deal, State Grid had to spend US$1.060 billion, taking on 99.94% of the capital stock of that Brazilian company.

China’s Anhui Zhongding Rubber-Plastic Products Co. Ltd, one of the world’s largest manufacturers of rubber products other than tyres, invested US$51.2 million in the construction of its first overseas factory and Gree do Brasil made an investment of US$20.7 million in a new factory in the Manaus Free Trade Zone.

This new factory aims, according to the group that produces air conditioning units, to increase its share in the Brazilian market from 10% to 30% over the next five years.

The Department for International Affairs of the Ministry of Planning, Development and Management also reported that from 2019 this Bulletin on Chinese Investments in Brazil will be published on a quarterly basis. (macauhub)