Chinese investment prepares 17 new projects in Chile

The announcement of the purchase of power company CGE in exchange for US $ 3 billion by State Grid International Development Limited (SGIDL), an international subsidiary of one of the main state power companies in China, set off the alarms of different political sectors and Free competition that questions that a firm that depends on the Chinese State can manage more than 50% of the national market for electricity distribution to homes -SGIDL had already acquired Chilquinta last year for US $ 2,230 million-.

Regardless of this discussion, it is a fact that the firms of the Asian nation are hungry for investments in our country. In fact, this Friday it was revealed that China Railway Construction Corporation presented the best offer to win the concession of Route 5 in its Talca-Chillán section, which will require an investment of US $ 804 million.

According to the Investment Promotion Agency for Chile, InvestChile, in 2019 for the first time investment from China led the agency’s portfolio with US $ 4,852 million in projects in different stages, leaving Canada behind (US $ 2,866 million ) and the US (US $ 2.79 billion). This year, despite the pandemic, five new projects from China have been added to said registry, adding 27 initiatives for US $ 4.47 billion at the end of the first half of 2020.

The projects leave InvestChile’s portfolio a few months or a year after they have fully materialized. Taking this into account, of the 27 Chinese investment initiatives, there are ten developments that are already installed or in the installation phase, such as the purchase of Chilquinta and also that of CGE by SGIDL, the data center (cloud) of Huawei or the purchase of the Australis salmon farm by Joyvio.

So then, there are 17 Chinese capital projects that are on the verge of being able to materialize in our country. According to InvestChile, 12 of them are in the early phase (market prospecting) and five in the initial phase (prior to installation).

If they are disaggregated by sectors, it is clear from the future news of Chinese investments in our country, according to InvestChile, four will be for global services (5G, cloud and technology), four for energy, two for mining, one financial, one for food. and five in miscellaneous areas. In total, the projects that have been able to estimate a future investment of this portfolio of 17 developments, total about US $ 690 million.

Data sheets on energy, infrastructure, agribusiness and global services

The energy sector has been the target of significant Chinese investments in Chile. “The acquisition of existing assets for the Chinese is the fastest way to grow in size and in global market share,” says Alicia Zhu, head of China Desk at InvestChile.

In Chile, in addition to the aforementioned examples of CGE and Chilquinta, there is the acquisition of a 27.7% stake in Transelec by China Southern Power Grid International (CSGI), the acquisition of the company Atiaia Energía by China Three Gorges (CTG), the purchase of the Pacific Hydro generator by State Power Investment Overseas Co Ltd. (SPIC) and the arrival of JA Solar, Yingli Green Energy Holding Company Limited and Envision Energy in ERNCs.

The second sector that arouses the most Chinese business appetite is the concession model in infrastructure works, where companies such as CHEC (a subsidiary of the state-owned China Communications Construction Company Limited), China Road and Bridge Corporation (a subsidiary of the state-owned company) have already invested in Chile. China Communications Construction Company) and the China Railway Construction Corp. Limited network chip.

Currently, the Ministry of Public Works has a portfolio of concessions, with a total investment of more than US $ 14,000 million for the period 2020-2024, which is very attractive to Chinese companies.

In fact, the Ibero-Asian consortium made up of China Road and Bridge Corporation (CRBC) and Puentes y Calzadas Grupo de Empresas, won the concession of the Maule Network last August, which considers the construction of three hospitals in the communes of Cauquenes, Constitución and Parral. The investment is US $ 224 million and marks the entry of both companies to Chile.

The third axis of Chinese investment is the agribusiness and food sector. An example of the above has been the acquisition of the Australis salmon company by Joyvio, with an investment of more than US $ 900 million; the purchase of a 12.5% ​​stake in Viña San Pedro Tarapacá by Jiangsu Yanghe Distillery Co., Ltd. for US $ 65 million; the acquisition of several wineries by Yantai Changyu Pioneer Wine for US $ 50 million; the purchase of Viña Santa Andrea by Cofco and the entry as producer, packer and exporter of fruits from Curicó to Gold Anda Agricultural.

Finally, in the global services sector, Zhu analyzes that “Chile’s connectivity to the region positions it as a hub to serve all of Latin America.” Proof of this is the installation of Huawei’s data centers in Chile to reinforce the digital transformation in the region, as well as the arrival of the Didi and Mobike applications. “