Peking to the Moon

How would you describe the relationship between private parties and public interests in Ecuador and China over the past few years?

The development of the relationship started in 2007 and continues to progress. Apart from this, the government has a new initiative to open up to partners across the world. For example, in the recent past, US-Ecuador relations have strengthened, and Ecuador has opened up its commercial relations with the EU. As a country, the more we open up, the more partners we seek out for investment or different loan options. One of the main reasons for developing these relationships is to establish a commercial agenda. Ecuador has developed an investment and project agenda, but over the last 10 years most of the relationship was on a public and political level, with less involvement of the private sector. We believe the relationship should take a step in this direction, attracting real Chinese investment. Ecuador has around USD3 billion in FDI from China, ranking eighth in the region for Chinese direct investment. However, those figures don’t match other capital flows, which are worth around USD50.2 billion. In terms of the commercial agenda, we have limitations as a country in exporting to China. The basic limitations are the distance, 7,000km, and obvious cultural differences. As a country, Ecuador can only export two products to China: bananas and mangoes. We do not have a trade permit for other types of products because the country has not negotiated this over our 10-year relationship with China. This is a political rather than technical issue. If a commercial agenda is put forward on the state level, trade could be opened up within six months. For example, Mexico achieved this, and the commercial agenda is now an important part of the Mexico-China relationship.

What might further ties between the two countries look like?

The Minister of Foreign Trade is doing a good job by opening up new markets and being open to different proposals. The Minister of Finance is also doing an amazing job by opening up different options for financing. This is positive for us because at the chamber, we have around 300 members from various sectors, and the export companies are looking for opportunities within the Chinese market. While trade can be improved on many fronts, there have been significant improvements. Ecuador’s sales of shrimp have grown a lot, and 50% of Ecuador’s production goes to the Asian market, with the majority going to the Chinese market. Ecuadorian shrimp has grown in its reputation as a brand of excellence in the Chinese market. That is great, but these markets have to be grown through a strong, strategic platform that allows them to remain so. We also have to diversify into other products. In comparison, Chile holds 72% of China’s fruit import market, and that market is set to grow over the next 20 years to around 60kg per capita per year. This is because Chinese consumers prefer imported fruits that come from Latin American countries, Africa, or Southeast Asia—regions that don’t have high pollution levels. Ecuador should take note of this perception and look at how its neighbors are responding to this trend. Ecuador needs to capitalize on its export strengths and how it handles FDI.

Other than food and fisheries products, what sectors are of interest for Ecuadorian-Chinese trade?

We have to focus on tourism. Ecuador as a country has a lot to offer the Chinese market in terms of another type of experience. Other countries’ agencies have worked together to create packages for Chinese consumers to attract the biggest influencers and bloggers within Chinese social networks to their country to experience it. Ecuador has to make use of the potential presented by the 100 million Chinese tourists that travel every year. It requires a strategy that works through Chinese social media, which means public and private sector involvement must be aligned.