Latin America is a top market for international merchants looking for expansion opportunities. Asia is the region from which cross-border merchants in Latin America are coming the fastest.
According to the World Economic Forum, China will double its trade with Latin America by 2035 to $700billion, accounting for 25 per cent of trade in Latin America. Furthermore, 600 investment projects in Latin America from Asian companies have been announced since 2020 – expected to kick off in 2022. They amount to a total investment of $75billion.
The two primary target countries are Brazil, with 26 per cent of total investment, and Mexico, with 23 per cent.
Nuvei has partnered with Americas Market Intelligence (AMI) to produce a report providing insights into the connections and synergies between Asia Pacific and Latin America. The Insights and Opportunities for Regional Expansion Success – Chapter One: Interconnecting Asia Pacific and Latin America report collates interviews with more than 40 industry stakeholders across the region, accompanied by deep desk research and original analysis.
According to the paytech firm, which offers more than 570 different payment methods and local acquiring in nearly 50 markets, Latin America and Asia have deep commercial ties that help sustain the world economy.
Trade between the two regions has grown significantly, at nine per cent annually since 1995, driven by China’s growth in manufacturing and Latin America’s production of natural resources.
“The motivation for APAC merchants to reach LATAM is the size of the market and population. When looking to expand globally, LATAM can be the ideal geography,” said Juan Franco, Nuvei senior VP and founding board member of the Singapore-Mexico Chamber of Commerce.
Among the products imported by Latin America from China are electronics and machinery, chemicals and plastics, and textiles and footwear, while the main exports include minerals, agriculture and meat, seafood, processed food, and beverages.
Latin America is particularly well-suited for Asian companies looking for new growth markets for several structural and cultural reasons, such as experience navigating digital transformation, high levels of fragmentation, high smartphone adoption and availability of payment models that enable easy offshore operations.
According to Nuvei’s report, the commercial relationships between the Asian and Latin American markets bring relevant results to the global economy and for decades have been responsible for supplying raw materials to Asia and industrialised products to Latin America.
More recently, e-commerce has been a source of commercial ties between the regions, with APAC companies succeeding at selling to the more than 300 million Latin American eCommerce shoppers.
Despite its recent e-commerce revolution, Latin America still requires development to remove some of the present inefficiencies. Challenges remain, including elevated fraud rates, low authorisation rates, difficulties
related to subscriptions, shopping cart abandonment, fees related to international transactions and foreign exchange, lack of access to credit, etc.