B6 Friday,September18,2015 SPECIAL REPORT: 2015 CHILE ... · SPECIAL REPORT: 2015 CHILE BUSINESS...

B6 Friday, September 18, 2015

SPECIAL REPORT: 2015 CHILE BUSINESS REPORT

Synergy Media Specialistsasked Minister of ForeignAffairs of Chile Heraldo Muñozabout his country’s relationswith China.

How would you characterise Chile-China relations today?Relations between Chile and China todayare among the most solid our country hasworldwide and, certainly, in the Asia-Pacific region. Chile was the first LatinAmerican country to sign a free-tradeagreement (FTA) with China, as well asthe first South American nation toestablish diplomatic relations with Chinaand grant market economy status toChina. Another “first” was achievedduring Premier Li Keqiang’s official visit inMay, when Chile took steps to become afinancial platform for theinternationalisation of the renminbi inLatin America.

Throughout the last decade, Chilefurthered its already positive relationshipwith China in the political and economicfields. In political terms, in 2012, bothcountries agreed to elevate their bilateralrelationship to the status of “strategicassociation”, implementing high-levelcooperation mechanisms in the politicaland economic areas.

In the economic sphere, the entry intoforce of the Chile-China FTA has broughtabout an important increase in bilateraltrade. Since then, our countries havenegotiated supplementary agreements inservices (in force since 2010) andinvestment (in force since 2014), with theobjective of deepening trade andinvestment ties.

How strong is the present state ofbilateral trade between Chile and China today? Today, China is Chile’s first trading partner

in the world. Moreover, during the visit ofPremier Li Keqiang, we were able tomake important progress beyond thearea of trade in goods, with the signing ofsignificant cooperation agreementspromoting reciprocal investment andcooperation in new sectors.

For Chile, one of the main objectivesof the FTA with China is to diversify ourexports to China and progressivelyinclude new goods and services.

During 2014, trade between Chile andChina reached US$32.671billion,representing 24 per cent of the Chileanforeign trade. Chilean exports reachedUS$18.437 billion. Moreover, China is oursecond partner on non-coppershipments, with US4.215 billion in 2014,and a 6 per cent more than the previousyear. Trade increased last year due to thegrowth of agricultural and forest industrygoods, which grew by US$245 million andUS$169 million, respectively.

The trade balance has beenfavourable for Chile since 2002 and in 2014the surplus reached US$4.204 billion.Also, between 2002 and 2014, trade grewat an average annual rate of 24 per centwhile exports to China increased by 25per cent yearly.

What sectors will benefit the most from acloser relationship?Chile is focusing its effort in diversifyingits export basket to the world, includingChina. In this context, during the next fewyears, Chile will promote tradeopportunities in the areas of agriculturaland manufactured products.

The free-trade agreement betweenChile and China went into effect nineyears ago this October. Since January 1this year, all Chilean exports to Chinaenter tariff free. This means that 1,611additional Chilean products were addedto the 5,725 that had this benefit.

Decade of ‘free trade’ drives China-Chile ties

Minister of Foreign Affairs of ChileHeraldo Muñoz

Among the main Chilean goods tobenefit are fresh grapes, wine, fish flour,frozen trout, salmon, olive oil and ironmanufacturing.

To mention just a few examples, in2004 less than 0.2 per cent of fresh fruitsshipments from Chile had China as theirdestination; nowadays, 16.6 per cent goesto that market. Food products alsoincreased their participation going from1.4 to 7.9 per cent. The same happenedwith the wine macro-sector thatincreased from 2 to 8 per cent and theforest industry from 11 to 24 per cent, all ofthem in the same period.

Imports coming from China have alsoshown a constant increase, with anannual increase of 19 per cent during the2005-2014 period.

Visit www.synergymediaspecialists.comfor the complete interview and moreinformation on China-Chile relations.

With nine wineries across Chile,including in San Pedro, Tarapacá,Leyda and Santa Helena, VSPT WineGroup has become the leader of finewine sales in the country. The groupis the second-largest exporter ofChilean wine and today deliverssome of Chile’s best wines to Asia.

The Group’s Viña San Pedrowinery, founded in 1865, is the oldestChilean large-scale winery. This yearmarks 150 years of viticulture with thewinery’s renowned brands includingAltaïr, 1865 Single Vineyard and GatoNegro. The winery commercialisedits wines for the Asian market in 1940,when the group first exported winesto Japan.

Viña Tarapacá, founded in 1874, is

the No 1winery for ultrapremiumwines in Chile, and its Gran Reservahas become a leading wine in Chileand abroad.

VSPT Wine Group’s Viña Leydawinery has won numerous awardsand gained international recognition.The winery’s location in the region’scool, coastal climate produces highlysought-after sauvignon blanc andpinot noir wines.

The group continues tostrengthen its ties to Asian marketsand has significantly increased itssales in China, Hong Kong, SouthKorea and Japan.

“We have built our business onour solid business strategy, strongbrands and quality products,” saysPedro Herane, VSPT Wine Group’sCEO. “As a global producer, we aretoday recognised both for ourprocesses and the high quality of our wines.”

The group exports wines to morethan 80 countries and this yearinvested US$35 million in vineyardplantations and the expansion of itsmain bottling plant, which is set to bethe most modern in South America.

“This investment will allow us todouble our production capacity,”Herane says.

“Combined with our world-classinfrastructure and technology, welook forward to competing more efficiently within theestablished and growinginternational wine markets.”www.vsptwinegroup.com

Grandes Vinos de San Pedro, VSPT Wine Group’s premium division

VSPT Wine Grouphas a successfulhistory of over 70 years in Asia

Pedro Herane, CEO

Sponsored page in cooperation with Synergy Media Specialists

One of the largest forestrycompanies in the world, employingover 13,000 people, ARAUCO has 30global production facilities and asales presence in over 80 countries.Charles Kimber, ARAUCO’s seniorvice-president of commercial andcorporate affairs, shares histhoughts on business in China.

When did ARAUCO establish itsbusiness in China, and how has it evolved?ARAUCO started doing businesswith China in 1977 with sales of sawlogs for the sawn timber industryand wood pulp for the paperindustry. Our annual pulp sales have increased to over US$1billion,and important volumes of sawntimber have been added to ourproduct offering. When ARAUCOentered the Chinese market, ourexport products were shipped to

only one port in China. Today, wehave over 200 customers and deliver products to paper producersand wood product processors

across the country. ARAUCO iscurrently one of China’s main pulpsuppliers, and our continuouspresence in the Chinese market for

over 38 years has helped us buildsteady and trustworthy relationshipsin China.

What factors contributed toARAUCO’s successes in China? Gaining the trust of the Chinesemarket takes years of work, andARAUCO was able to pass thathurdle. However, maintaining trust isno less of a challenge. Since wehave been in China, we haveexperienced the changes in themarket. Initially, we saw China as aspot market with significantvariations. Today, customers in theChinese market require agreementsfrom suppliers that translate intoannual sales programmes. A keyfactor for our success in China hasbeen the country’s sustained growthrate. Chile and China have alsodriven and promoted alliances andagreements which have contributed

to our strong and stable traderelationship.

What does the future hold?China is ARAUCO’s largest market,and our presence here is veryimportant. The Chinese market hasthe greatest growth rates in theworld in terms of wood pulp, paperconsumption and wood products ingeneral. In addition to the countrybeing an exporter of finishedproducts that require importing rawmaterials, there is huge potential inChina for growth right across thedomestic end-consumer market.Following our strategy and long-term vision, ARAUCO will continueto support the growth of the Chinesepaper and wood products industrieswith quality products and ourreliable commercial partnershipapproach to doing business. www.arauco.cl

ARAUCO is planting the seeds of success in China

ARAUCO delivers products to over 200 customers, includingpaper producers and wood product processors in China.

With over five decades of experienceas a leading trading firm in SouthAmerica, Capricorn represents thebiggest Chinese groups andenterprises engaged in a wide rangeof industries including food, power,construction and electrical.

“We supply steel towers fortransmission lines, technologyproducts, textiles, chemicals, plasticsand a diverse selection of otherproducts sourced from our reliablepartners in China,” says Mark Argy,president of Capricorn. “We arecurrently working on the largesttransmission line project in SouthAmerica. Our supplier for the projectis the largest steel towermanufacturer in the world.”

The company has been active inChina for 25 years and hasestablished close relations with

Chinese businesses. Capricorn hasalso benefited from the free tradeagreement (FTA) signed betweenChina and Chile in 2005. “When youeliminate tariffs on steel and chemicalproducts, you create an enormousadvantage for businesses and,ultimately, customers,” Argy says.

Capricorn also has offices in Lima,Peru, and Medellin, Colombia, andwill set up a new office in Sao Paulo,Brazil, in the coming months.

Capricorn’s office in Guangzhou is dedicated to quality control toensure products are tested beforethey are shipped to Chile. “Wesupport many large South Americancompanies with offices in China who ask us to support them inmonitoring suppliers from a qualityand delivery perspective,” Argy says.“We share our expertise andexperience in China while connectingChinese companies to partners inSouth America.”

As demand for Chinese productsin South America continues toincrease, Argy constantly evaluatessuppliers looking to serve hiscustomers in the region. “We are

planning to establish joint ventureprojects with Chinese companies inChile and are in discussion with largegroups in China,” Argy says. “Today,Chinese companies are beingencouraged to enter internationalmarkets and to import more foreignproducts into China. In both cases,they need international partners, andwe can fulfil that role for them.”

With a firm strategy in place,Capricorn looks set to strengthen its relationship with China. Argy says:“The quality of Chinese-madeproducts continues to improve. In thebeginning, we simply imported basicraw materials; today, we import high-technology products. We will continue to grow in line with the reputation and quality ofChinese products.”www.capricorn.cl

Supplying South America with quality products from China and Asia

Mark Argy, president

Carey, Chile’s largest law firm withmore than 200 legal professionals,will be opening its first overseasrepresentative office in Beijing laterthis year.

“We have established strongrelations with large Chinese law firmsover the years,” says Jaime Carey,managing partner of Carey. “We feelthe time is right to establish an officein China to facilitate two-wayinvestment between Chinese andChilean companies.”

The firm was actively involved inthe first wave of Chinese investmentsinto Chile and is anticipating a

second wave of Chinese investorslooking at opportunities in thetelecom, mining, infrastructure,finance and agro sectors.

As the winner of Chambers LatinAmerica: ‘Latin American Law Firm of the Year’ in 2012, Carey’s clientsinclude large multinational firms andChile’s leading cross-industrycompanies.

As a full service firm, Carey is an effective bridge betweenjurisdictions and is committed tobeing the first point of contact forChinese investment into Chile.

“The opening of ourrepresentative office in Beijingsymbolises our commitment to ourChina practice,” Carey says.

“We are focused onopportunities in the Chinese marketand fully expect Chile and China tofurther increase their business andtrade ties in the years to come.”www.carey.cl

Helping two-way investment betweenChinese and Chilean companies

Jaime Carey, managing partner

The Port of Valparaiso is Chile’s maincontainer and passenger port, andone of the South Pacific’s mostimportant seaports. Today,considering the Port of Valparaiso’scargo throughput, China has becomethe No 1 import partner and No 2export partner, and the port is helpingwith an increasing amount of tradebetween the two countries.

“Since the free trade agreementbetween our countries wasestablished in 2005, total cargothrough the port has increased from 5.8 million tons in the first year to more than 11million tons in2014,” says Gonzalo Davagnino,general manager of the Port ofValparaiso. “By 2014, 30 per cent ofimports through the Port of

Valparaiso were from China.”Increased bilateral trade and the Portof Valparaiso’s “brotherhoodagreement” with the Port ofShanghai symbolise strongconnections between Chile andChina. Today, continuingdevelopmental plans for the Port ofValparaiso present tremendous

opportunities for Chinese investors,port operators and infrastructuredevelopers.

The port has been awardingconcessions to leading global firmsto operate and expand Terminals 1and 2, allowing the port to serve fourPost Panamax vesselssimultaneously.

Future projects include a newworld-class passenger terminal, anintermodal station to handleincreased trans-shipped rail cargo,and a third 2.2 million 20-footequivalent (TEU) unit capacityterminal. “These significant projects may eventually require aconcessioner to build and operate them,” Davagnino says. “Wefeel these projects could beattractive for Chinese investorslooking for opportunities in Chile, asboth countries continue tostrengthen their very closerelationship.”www.puertovalparaiso.cl

Port of Valparaiso brings Chile and China closer together

Gonzalo Davagnino, general manager

Viña Carta Vieja’s proud familyheritage dates back to 1825, whenCarlos Adolfo del Pedregal broughtEuropean grape vines from his nativeAsturias, Spain, and planted them inChile’s Loncomilla valley.

“Our family history can be foundin every bottle of wine we produce,”says José Manuel del PedregalLabbé, CEO of Viña Carta Vieja. “Ourfamily lives and breathes thebusiness, and our quality wines areappreciated by our customers.”

Since 1825, Origen, Aves del Sur,Carta Vieja and G7 are the DelPedregal brands. Ninety-five per centof the wines produced are for export,and a third of these reach China andthe rest of Asia.

“China was our first exportdestination in Asia, and weestablished an office in Shanghaiabout three years ago as a result ofthe growth in the market,” says JoséManuel del Pedregal Mujica, aneighth-generation family member,son of the CEO and export director ofAmerica and Europe. “Last year, werecognised the potential of the rest ofAsia and moved our operations toHong Kong.”

In China, the Carta Vieja and G7 brands are gaining popularity.Carta Vieja is the most emblematicbrand, while G7 represents the pride of seven generations ofwinemaking.

“We have changed the taste ofthese wines to make them even moreenjoyable,” del Pedregal Labbé says.“Our wines reveal the identity ofChile: cool, fresh whites and warm,intense reds.”

With anticipated growth in Chinaand the rest of the world, the familyrecently bought a new farm andincreased their total land area to1,300 hectares.

“This increase in capacity means we are now self-sufficient interms of grapes and technology,” delPedregal Mujica says.

“We intend to build our winebrands and deliver excellent wines toour customers in China and the restof the world.” www.delpedregalfamilywines.com

Eight generations ofwinemakers from Chile’s Loncomilla valleyreach out to China

José Manuel del Pedregal Labbé, CEO