Insight: Chinese investors sour on Brazil, and projects melt away
By Brian Winter and Caroline Stauffer
SAO PAULO (Reuters) - For Chinese investors, Brazil is no longer the promised land.
After making a big push into the South American giant in search of raw materials such as iron ore, as well as a promising market for their consumer goods, Chinese executives have grown frustrated with stagnant economic growth, heavy costs and what they see as a political and popular backlash against their presence.
As a result, Chinese investment is falling, and as much as two-thirds of the roughly $70 billion in projects announced since 2007 is either on hold or has been canceled, according to recent studies and interviews with Chinese and Brazilian officials.
The unexpected decline, which investors and analysts say has little hope of reversing itself anytime soon, will deprive Brazil's struggling economy of what once seemed like a sure-fire source of growth for years to come.
"The ardor for investment in Brazil is fading. Operating in Brazil is a huge challenge," said Zhang Dongxiang, chief executive of the Brazilian unit of Bank of China Ltd (601988.SS: Quote), one of China's four largest state-owned commercial banks.
In a rare interview in his Sao Paulo office that included some of the sharpest criticism of Brazil by any Chinese business leader to date, Zhang complained of growing hostility from the Brazilian public as well as "protectionist" policies passed by President Dilma Rousseff's left-leaning government.
"Public opinion sometimes seems to be against foreign investment ... as if it makes local industry less competitive," he said. "There are some antiquated ideas."
While some Chinese companies are succeeding in Brazil, he said, "many are having doubts." Continued...