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Business Opportunities for Portuguese Speaking Countries’ Products in China

1. TRADE BETWEEN CHINA AND PORTUGUESE SPEAKING COUNTRIES INCREASES SIGNIFICANTLY

Portuguese Speaking Countries with a total population of around 200 million in four continents, which are mostly developing countries, have abundant resources and therefore have a lot of potential for the developments of business.

With China being the biggest developing country in the world, trade co-operation between it and Portuguese Speaking Countries is complementary, therefore co-operation between them holds vast businesses opportunities.

TABLE 1: TRADE BETWEEN CHINA AND PORTUGUESE SPEAKING COUNTRIES 2006 (UNIT: U.S. DOLLAR)

Portuguese Speaking Countries
Import-export volume
Export volume*
Import volume**
Compared with 2005
Import-export volume
Export volume*
Import volume**
Angola
11,830 million
890 million
10,930 million
+70.1%
+139.9%
+66.1%
Brazil
20,290 million
7,380 million
12,920 million
+37.0%
+52.9%
+29.3%
Cape Verde
10,090,000
10,090,000
0
+94.6%
+94.6%
Guinea-Bissau
5,680,000
5,680,000
0
-2.0%
-2.0%
Mozambique
210 million
130 million
80 million
+25.9%
+39.9%
+8.5%
Portugal
1,710 million
1,360 million
350 million
+38.7%
+49.1%
+9.3%
East Timor
16,760,000
5,790,000
10,960,000
+1,215.9%
+355.2%
Sao Tome and Principe
1,220,000
1,220,000
0
+121.4%
+121.4%
Total
34,100 million
9,800 million
24,300 million

Source: Ministry of Commerce of PRC website (www.mofcom.gov.cn)
*Export volume refers to the exports from China to Portuguese Speaking Countries
**Import volume refers to the imports of China from the Portuguese Speaking Countries

The First and Second Ministerial Conferences of China and Portuguese Speaking Countries Economic Co-operation Forum (Macao), held in Macao in 2003 and 2006, were a great success. China and seven of the Portuguese Speaking Countries signed two Economic and Trade Co-operation Action Plans, representing a new stage in economic and trade co-operation between them all.

Trade between China and Portuguese Speaking Countries has grown rapidly since 2003, the total volume in 2002 was around US$ 6 billion (exports to Portuguese Speaking Countries were US$ 1.86 billion and imports were US$ 4.2 billion). In 2006, the import and export volumes rose significantly to US$ 34.1 billion (exports to Portuguese Speaking Countries were US$ 9.8 billion and imports were US$ 24.3 billion). The imports from Portuguese Speaking Countries rose from US$ 4.2 billion in 2002 to US$24.3 billion in 2006, an increase of 500%, reflecting the fact that products from Portuguese Speaking Countries imported into China are very competitive.

2. SOLID POTENTIAL OF THE PRODUCTS FROM PORTUGUESE SPEAKING COUNTRIES

Data shows that the imports to China from the Portuguese Speaking Countries are mainly energy resources, raw materials and electronic products among others. In fact, wine, coffee, non-staple food products and even new and high technology products (such as aeroplanes) from Portuguese Speaking Countries are considerably competitive in the international market. Meanwhile, the demand for these products on the Mainland is constantly increasing, so it is worth looking at the related business opportunities for trade. The most competitive are as follows:

WINE

Wine is the second most popular alcoholic beverage after beer worldwide. According to statistics1, the revenue from the sales of wine in China increases by 2 digits annually, showing a fast developing trend, the revenue from the sale of wine exceeded RMB10 billion in 2005 for the first time. At present, the global annual per capita consumption volume of wine is about 4.5 litres, while the annual per capita consumption volume of wine in China is about 0.35 litres, thus there is plenty of room for development. According to the estimation of the World Wine Industry Association, the sales volume of wine is increasing faster in Mainland China than the global average. In addition, because China’s “entry to WTO” promises to adjust and reduce the import tax on wine, the relevant tax rate was reduced to the present 14% from the over 40% in 2001 (importers of wine need to pay 17% value-added tax and 10% consumption tax), which has provided more favourable conditions for wine from overseas producers to enter the Mainland market.

Portugal is one of the top ten international exporters of wine, and its price is relatively lower than other exporters in Europe. It is believed that the wine products from Portugal possess a sound development potential on the Mainland market.

COFFEE

Coffee is one of the world’s most popular beverages. In recent years, the consumption of coffee in China has followed the trend overseas and has recorded a faster development. Data shows2 that the current consumption of coffee in China is 30,000 tons and is expected to show huge growth in the future. It is estimated that the volume of coffee consumed in China will rise to 120,000 tons in 2010 and the sales volume will reach RMB10 billion.

Brazilian coffee enjoys great prestige in the world, East Timor is also a major producer of coffee, so the coffee trade between China and these Portuguese Speaking Countries has great prospects.

NON-STAPLE FOODS

The increase in the total retail sales volume of national consumer goods showed the highest growth levels in 2006, the sales of non-staple food have also shown an obvious increase. In addition, people’s living standards are improving constantly which has made the demand for top-grade edible oil, such as olive oil, to rise by a large margin. In recent years, the import volume of olive oil in China increased rapidly. According to data3, China imported about 400 tons of olive oil in 2001, increasing to 3,900 tons in 2005.

Portugal’s olive oil is popular around the world and other Portuguese Speaking Countries export non-staple food too, so the trade business opportunities can’t be overlooked.

NEW AND HIGH TECHNOLOGY PRODUCTS (AEROPLANES)

Although Portuguese Speaking Countries are mostly in developing areas, the new and high technology products of some of them are considerably competitive for the international market, the manufacture of aeroplanes being one of them.

Air transportation is one of the fastest developing industries on the Mainland that is followed with interest. In 2006, the national civil aviation’s passenger volume was 9.8% higher than the average growth rate around the world, passenger volume was 160 million people, the volume of freight and mail was 3,490,000 tons, representing an increase of 15.5% and 13.9% when compared with 2005.

Aircraft manufacturing is one of the predominant industries of Brazil. Embraer is the fourth largest aircraft manufacturing company in the world and in August 2006, China Hainan Airlines bought 100 commercial aeroplanes, amounting to US$ 2.7 billion, which further increased the trade between China and Brazil.

TABLE 2: NATURAL RESOURCES AND EXPORT PRODUCTS OF PORTUGUESE SPEAKING COUNTRIES

Portuguese Speaking Countries Natural Resources / Products
Angola
  • Main exports: Crude oil, diamonds, refined oil products, natural gas.
  • The most outstanding industrial area: Tyres, fertiliser, chemical fibre, glass and iron.
Brazil
  • Main exports: Iron ore, soybeans, footwear, coffee and automobiles.
  • In Latin America, the manufacturing industry of Brazil is the largest and most diversified . Apart from traditional industries, (such as mechanical tools, electrical machinery equipment and automobiles), technically more advanced industries have been developed in the last ten years, the most outstanding being the manufacturing of aircraft and telecom equipment.
Cape Verde
  • Main exports: Fuel, garments, footwear and accessories, fish and shellfish.
  • Main industries include: Food and beverages, fish processing, footwear and garments, salt, ship repairs.
Guinea-Bissau
  • Main exports: Cashew nuts, frozen shrimps, frozen fish, peanuts, timber.
  • In terms of industry, it relies mainly on agricultural products and food processing. The main cereal crops are rice, cassava, beans, potatoes and sweet potatoes.
Mozambique
  • Main exports: Prawns, cotton, cashew nuts, sugar, copra and citrus fruits, electricity and timber.
  • Mainly processing industries: Sugar refining, tea, food and cashew nuts processing, cigarettes, oil extracts, textiles, timber, cement, oil refining, engines and vehicles, batteries and tyres.
Portugal
  • Main exports: Transportation accessories, machinery and utensils, clothing and footwear.
  • Cork is an important export product and its production is half of the global output. The quality of its wine and olive oil is recognised around the world.
East Timor
  • Main exports: Coffee, sandalwood, marble, petroleum and vanilla beans.
  • Key industries: Printing, soap production, handicrafts and textiles.
Sao Tome and Principe
  • Main exports: Cocoa, copra, coffee and palm oil.
  • Key industries: Small-scale construction, textiles, soap, beer, fish processing and timber.

3. THE AIM IS THAT BILATERAL TRADE WILL BE UP TO US$ 45 TO 50 BILLION DOLLARS IN 2009

The characteristics of Portuguese Speaking Countries products and their market opportunities in China are detailed above. According to the “Economic and Commercial Co-operation Action Plan between China and Portuguese Speaking Countries (2007-2009)” of the Second Ministerial Conference of China and Portuguese Speaking Countries Economic Co-operation Forum (Macao), signed in September 2006, the participating countries agreed unanimously to take measures to promote mutual trade among China and Portuguese Speaking Countries, striving to boost bilateral volumes to US$ 45 to 50 billion by 2009, especially in increasing the export value of Portuguese Speaking Countries to China. This is important information regarding the prospect of Portuguese Speaking Countries’ products in China.

1 Statistics of China Alcoholic Drinks Industry Association
2 China Commodity Net
3 Grain News