Latin America and Asia are, on the face of it, the perfect partners. As Asian populations and economies develop – especially with respect to China – the region has an insatiable demand for natural resources: food to feed its growing population, energy to fuel its emerging industries and metals to support its infrastructure. Latin America’s supply of these commodities is immense. The opportunities for regional corporates are therefore clear. Yet the pitfalls are perhaps less obvious. While the regions’ trading needs may complement each other, both Latin American and Asian corporates have struggled with cultural and language differences, restrictions on certain investments, physical distance and the high cost of transportation.
And in the latest issue of Trade & Forfaiting Review, Agnes Vargas and Thomas Krieger, Commerzbank, discuss the biggest risk corporates face – payment risk, also linked to political risk. Certainly, both regions remain areas where political, economic and legal risks can hamper trading relationships and ruin well-planned expansion or diversification strategies.
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