【Text/Observer Network Lv Dong】
On the afternoon of February 6, local time, according to Argentina's "Twelve Pages" (Página12), government sources accompanying Argentine President Alberto Fernandez's visit to China revealed that Xiaomi Group will open stores in Argentina and will produce smartphones in tierra del Fuego, with a total investment of millions of dollars. The person added that the official announcement could be issued within 60 days, but Xiaomi's trip to Tierra del Fuego "has become a fact.".
Earlier, at noon Beijing time on the 6th, Chinese President Xi Jinping pointed out in a meeting with Fernandez, who came to China to attend the opening ceremony of the Winter Olympics, that China is willing to share development opportunities with The Argentine side and help Argentina expand exports and industrial upgrading. The two sides should jointly build the "Belt and Road" with high quality, give full play to complementary advantages, implement existing major projects such as hydropower and railways, and deepen cooperation in trade, agriculture, energy and mining, infrastructure, investment and financing, and anti-epidemic areas.
Screenshot of Página12 report
Xiaomi's production of mobile phones in Argentina has long been rumored, but it has not been conclusive. Twelve Pages reports that xiaomi phones are expected to be foundry by Argentine local company Agentcor-Solnik, which has a factory in Tierra del Fuego and has the industrial equipment needed to produce the latest generation of electronics. The Argentine company, which currently employs 400 people, will also offer after-sales service for Xiaomi products, with Bose, Nokia and Apple all being its customers.
In the past year, Xiaomi has grown significantly in the Latin American market. According to data released by market research agency Canalys, as of the third quarter of 2021, Xiaomi has become the third mobile phone brand in Latin America, with a market share of 11% and a year-on-year growth rate of 19%. However, compared with the top two brands in the region, Xiaomi shipments are still significantly different. The data shows that although the shipment volume of Samsung mobile phones in the same period fell by 16% year-on-year, the market share was still 42%; Lenovo mobile phone shipments increased by 35%, with a market share of 26%, both of which were better than Xiaomi.
Source: Canalys
As a natural extension of the Maritime Silk Road, Latin America is an important participant in the construction of the "Belt and Road". It is not too late for Xiaomi mobile phones to enter the Latin American market. As early as 2017, Xiaomi has entered the markets of Colombia, Chile, Mexico and other countries, and in 2019, it has entered Peru and Brazil. As of the third quarter of 2021, Xiaomi has become the largest smartphone manufacturer in Peru, ranking second in Colombia, with a market share of around 30%.
But in Argentina, which has more than 40 million people and the fourth most populous population in Latin America, Xiaomi has not opened the situation for a long time. Until June 2021, the Chinese Ministry of Commerce released the news that Xiaomi and the Argentine local company Eternalcor-Solnik reached a cooperation agreement to officially land on the Argentine market, planning to first export smartphones to Afghanistan and explore the local production in Afghanistan. Etercor will be the first to import 100,000 Redmi Note10 5G models and offer local consumers "more competitive" phone prices than other brands through its digital sales channels.
Baierdi, general manager of Etercor, who has been designated as a Xiaomi distributor, said that "consumers want alternatives, they see Xiaomi being able to provide them with the right products, Xiaomi has real growth and development potential in Argentina". According to Etercor, the Xiaomi phones are so well received by the Argentine public that "they sold out" within the first few weeks of going on the market.
Screenshot of the website of the Ministry of Commerce of the People's Republic
Compared to Xiaomi, Huawei entered Argentina much earlier.
According to the website of the Consulate General of Argentina in Shanghai, Huawei Argentina has more than 500 employees, of which 70% are local employees. At the same time, they work with more than thirty subcontractors to indirectly offer more than 1,200 positions in Argentina. Huawei, working with companies such as New San, BGH and Brightstar, produced 650,000 smartphones in Argentina in 2015 and is expected to reach 2 million in 2016. In 2018, Huawei's mobile phone shipments in Latin America hit a new high, up 51% year-on-year, ranking third with 11.6% of shipments.
However, as the United States continues to increase sanctions, Huawei's mobile phones continue to shrink around the world, leaving a large market gap for competitors such as Xiaomi. Argentine media DataClave quoted sources as reporting that Xiaomi's production of mobile phones in Argentina is an important investment to open up the country's market. To achieve expansion in Argentina, Xiaomi has agreed to produce smartphones on Tierra del Fuego, and the investment plan is expected to take place after Fernandez completes its trip to China.
Not only Xiaomi, but also the glory spun off from Huawei also covets the Latin American market.
In December 2021, canalys reported that Honor plans to fill the market space ceded by Huawei to meet the demand for Android high-end smartphones in the Latin American market. The manufacturer began construction of a logistics hub in Panama in the summer of 2021 and hopes to be completed by the end of 2022. The company also officially opened its first distribution center in Latin America in the suburbs of Mexico City in early October 2021 to meet the national needs of partners and end customers. Honor then launched its official e-commerce website and new HONOR 50 models in Chile, Colombia, Mexico, Panama and Peru.
Although Argentina is geographically one of the countries furthest from China, the Belt and Road Initiative has brought Argentina closer and closer to China, which is now Argentina's second largest trading partner. In fact, as early as a few years ago, Chinese companies such as ZTE and Lenovo began to enter the Argentine market. ZTE set up a branch in Argentina and selected the mobile phone manufacturing source in Tierra del Fuego. Lenovo is no exception, as early as 2011, the company signed an agreement with the Argentine Newsan Group to build a production base on Tierra del Fuego to assemble laptops.
According to public information, tierra del Fuego Free Zone is located in the southernmost part of South America, close to the Antarctic continent, and is one of the new industrial centers in Argentina. At the end of 2019, domestic media reported that Argentina's previous industrial base was weak, and many products were dependent on imports. Therefore, in order to protect its own industry, the Argentine government implements a mandatory policy, and all mobile phones sold in Argentina must be finally assembled in the Tierra del Fuego factory.
Tierra del Fuego location indication Google Maps screenshot
This means that Chinese smartphones must first travel nearly 20,000 kilometers in the form of spare parts, approved and released by customs, and then transported by land, through the Patagonian wasteland, through the strait and finally to the factory cluster on Tierra del Fuego. After being assembled by local workers, the finished phones will then be returned to the big cities in northern Argentina for sale. It is also this layer of circulation coupled with the application procedures, after the new mobile phone is listed in China, it usually takes 3 to 6 months to appear in the Argentine market.
This process adds a lot of obstacles to smartphone manufacturers. There have been domestic smart phone factory businessmen frankly said that Argentina production and transportation of mobile phones costs are high, coupled with the Argentine customers' funds are often cut off, so the need for strong cash flow as the back of the support, small and medium-sized mobile phone manufacturers do not have the willingness and strength to participate in such a "battlefield".
However, difficulties go hand in hand with opportunities. At one point, Samsung phones accounted for more than 60 percent of Argentina's market share in 2015, and Motorola's market share of about 10 percent. But with Motorola's incorporation into Lenovo in 2014, after integration, argentina's Newsan Group took over Motorola's local smartphone production orders. Benefiting from this, Motorola mobile phones' market share in Argentina soared to more than 40% in 2019.
In a meeting with Chinese leaders on February 6, Argentine President Fernandez also expressed his willingness to welcome Chinese companies to continue to invest in Afghanistan.
He said that Argentina is a friend of China, has always firmly pursued the one-China policy, has always been firmly committed to deepening Friendly Relations between Argentina and China, and is willing to strengthen the exchange of experience in governing the country with China. The Afghan side will continue to actively participate in the joint construction of the "Belt and Road" cooperation, deepen cooperation in trade, agriculture, infrastructure construction and other fields, and welcome more Chinese enterprises to invest and cooperate in Afghanistan. The Afghan side is willing to cooperate closely with China within the international multilateral framework, practice multilateralism and play a greater role in promoting cooperation between CELAC and China.
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