Organizations and countries often rely on other nations for resources or manufacturing, as raw material costs and manufacturing labor are often less expensive in less developed nations. This makes purchasing goods from outside the country and outsourced manufacturing an effective and budget friendly way for companies to ensure they can sell their products for as little as possible, allowing them to remain competitive and popular with consumers.
China putting a focus on South America
Chinese companies have recently set their sights on South America as the new frontier for manufacturing, raw material procurement and sales. According to The Guardian, Chinese money has flowed into several countries in the region, providing loans for mining, infrastructure and other projects, with much of the money going to Venezuela, Ecuador, Brazil and Argentina. The amount China has invested in South American countries has increased enormously over the past several years. While trade between China and South American continent came in at $10 billion in 2000, it skyrocketed to more than $241 billion in 2011.
Countries in South America are sending more exports to China, with raw materials like copper, iron ore, oil and soybeans topping the list of goods sent overseas. As China attempts to gain a hold in provisions worldwide, it has stepped up its procurement from foreign countries and is also investing heavily in South American markets to ensure it continually has access to valuable natural resources. Chinese companies are not only making use of these materials, they are also hoping these partnerships will prove beneficial in the future, as they seek to expand exports to these new markets. Low-cost Chinese products could soon flood South American stores, making it more difficult for local manufacturers to remain competitive and forcing them to find a way to bring their production expenses down so they can offer lower prices.