China overtakes Brazil in South America’s export market

Brazil’s exports are losing market share this year in neighboring countries, while the export market of China is growing in South America. Brazil’s share in the imports of a group of eight key South American destinations—Argentina, Bolivia, Chile, Colombia, Ecuador, Paraguay, Peru, and Uruguay—fell to 11% from January to August this year, compared to 13.2% in the same months last year. Meanwhile, China’s share rose to 23.4% from 22.1%. The U.S. also lost ground, dropping to 18.2% from 18.8% in the period, according to data compiled by Valor based on official reports from each of the analyzed countries.

Among the eight countries, Brazil only managed to maintain its market share in Uruguay. On the other hand, China, seeking to offload products in markets that do not impose trade defense measures as strongly as the U.S. and European countries, advanced everywhere except Argentina and Paraguay. In Argentina, China’s market share dropped, but less than Brazil’s. Only in Paraguay did China lose more share than Brazil. The U.S. also reduced its market share in these countries, with the sole exception being Bolivia. The market share comparisons by country were based on the most recent data available from each destination, ranging from January to August, and up to September for Argentina, Uruguay, and Paraguay.

The report shows that Brazil’s share in Chile’s total imports dropped to 9.2% from January to August this year, compared to 10.6% in the same period of 2023. China, Chile’s leading foreign supplier, increased its share to 23.9% from 23% during the same period. The U.S. saw a slight decline, to 20% from 20.2%. In Peru, both Brazil and the U.S. lost market share, while China gained. Over the same eight months, Brazil’s slice fell to 5.6% from 7.5%, and the U.S. share dropped to 18.7% from 21%. China strengthened its leadership, rising to 27.4% from 25.2%.

In Colombia, the U.S. remained the largest external supplier, but its share fell to 25% from 25.6% from January to August. China, the second-largest exporter, advanced by 2.8 percentage points, reaching 24% in 2024 for the same eight months. Brazil’s share dropped to 5.3% from 7.1%, placing the country fourth among suppliers to Colombia, behind Mexico as well.

In Argentina, Brazil remains the leader, holding a 22.8% market share from January to September 2024, 1.5 percentage points lower than the same period in 2023. China’s share dropped to 17.9% in 2024 from 19% in 2023, while the U.S. declined to 11.1% from 12% over the same nine months.

The chart below was drafted using DataLiner data, a Datamar-original maritime intelligence product. It compares outbound container shipments from Brazil to Argentina between January 2021 and August 2024 to inbound container imports from Argentina heading to Brazilian ports. See more details below.

Brazil-Argentina Container Trade | Jan 2021 – Aug 2024 | TEUs

Source: DataLiner (click here to request a demo)

In North America, China made significant gains in Mexico, pushing the U.S. aside.

For Silvio Campos Neto, an economist at Tendências, the data reflects China’s strategy to boost exports due to excess capacity in several sectors. “With weaker domestic demand, China is more aggressively targeting foreign markets, including South America,” he said.

According to China’s General Customs Administration, Chinese exports to Brazil, along with the eight key South American destinations, totaled $106.3 billion from January to September. This represents only 4.1% of China’s total export revenue during the period but shows an 11% increase compared to the same months in 2023, significantly higher than China’s overall export growth rate of 4.3%. Sino-Brazilian trade boosted China’s performance in South America, with Chinese exports to Brazil reaching $55.1 billion, a 24.9% increase.

Excluding Brazil and considering only exports to the other eight South American markets, China’s shipments totaled $51.2 billion from January to September, a 0.8% drop compared to the same period in 2023. A 29.8% drop in Chinese exports to Argentina weighed heavily. However, China increased shipments to four of the eight destinations: Colombia, Peru, Uruguay, and Paraguay. In Chile, there was a 1.2% decrease. Chinese exports to Ecuador and Bolivia also fell, dropping by 2.4% and 14%, respectively, over the same nine months.

Brazilian data from the Secretariat of Foreign Trade (SECEX/MDIC) shows that Brazil’s exports to Argentina, its top trading partner in South America, also plummeted, falling by 29.2% from January to September 2024, compared to the same period in 2023, to $9.7 billion this year from $13.6 billion in 2023. Unlike China, however, Brazil’s export decline was more widespread, affecting seven of the eight countries, with steeper losses.

Brazil’s shipments to Colombia, Bolivia, and Peru fell by 21.6%, 25%, and 17.9%, respectively. Altogether, Brazilian exports to the eight countries totaled $25.6 billion this year, down 20.5% from 2023 between January and September. The only exception was Paraguay, where Brazil’s exports grew by 1.9%. During the same period, Brazil’s total exports rose by 0.8%.

In Argentina’s case, the country’s economic recession, which affects all suppliers, must be considered, said Mr. Campos Neto from Tendências. Argentina’s total imports dropped by 24.2% from January to September, according to the country’s official data. Mr. Campos Neto also pointed out that in 2023, Brazil had an atypical export of soybeans to Argentina due to the neighboring country’s crop failure, which inflated the base of comparison. “But this doesn’t change the analysis that China is expanding its exports in the region,” he noted.

The automotive sector is another key factor, he said. “A significant portion of Brazil’s exports to South American countries is tied to the automotive industry, which is undergoing significant global change with the large-scale entry of Chinese electric vehicles. This explains part of the dynamics. Brazil is losing market share in these sectors. While there are specific factors, the broader picture reflects differences in competitiveness. We are geographically close to these countries, yet China, on the other side of the world, is more competitive,” he added.

According to SECEX data, 91.6% of Brazil’s exports to Argentina from January to September this year were industrial goods. For Paraguay, Colombia, and Peru, the figures were 97%, 94.5%, and 98.3%, respectively. For Chile, the share was lower at 64.7%.

Argentina remains Brazil’s third-largest export destination, behind China and the U.S. Among South American neighbors, Argentina absorbed 37.7% of the total exports to the group of eight countries from January to September this year. Chile follows with 20.2%, then Paraguay and Colombia with 10.6% and 9.3%, respectively. These eight countries accounted for 10% of all Brazilian exports in 2024. Automobiles represented 14% of what Brazil shipped to Argentina, the same percentage for Colombia. For Peru, the share was 10% over the same nine months.

Brazil has accelerated its imports of Chinese electric vehicles this year, boosting the Asian country’s exports to the region, said Livio Ribeiro, a partner at BRCG and researcher at the Brazilian Institute of Economics (FGV IBRE). This trend was driven by higher import taxes on electric and electrified cars. Brazil began charging the tax in January, and imports surged to take advantage of a more favorable tariff that was in effect until the end of June. The tax hike was a reaction to the increase in Chinese electric vehicle imports, which advanced in 2023.

“For some time now, China has been advancing in our captive export markets. In the last year and a half, Chinese advances in Brazil’s more traditional markets for manufactured goods have increased, affecting various segments of the supply chain. This is part of China’s consistent expansion strategy, leveraging opportunities where trade defense measures are less intense, particularly in Latin America, except for Mexico and Brazil,” Mr. Ribeiro said.

Welber Barral, a partner at BMJ, noted that the situation also reflects trade agreements that China has signed with countries in the region. “China also has mechanisms like financing and export insurance that Brazil no longer offers. Chinese investments and loans in these countries also help support the export of goods,” he said.

Source: Valor International

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