On Wednesday evening, Tim Kingston, the General Manager at Goldman Sachs and part owner of Kingston Family Vineyards, joined us on the roof top of our hotel for a glass of wine and discussion about the Chilean economy. From the perspective of a manager finding foreign investors to come to Chile and as a local business owner, Tim is uniquely qualified to assess the current economic potential.
With news that China’s exports fell 25% and imports declined by 14%, many are concerned about the impact on South American economies because of the asymmetrical relationship with China. For example, 40% of the world’s supply of soybeans is imported by China. Of this, nearly 75% is supplied by Brazil and Argentina. China also imports 20% of the world’s copper, a major export for Chile. With so much of the Chilean economy dependent on commodities, how will Chile survive the downturn?
Despite being hit heavily by the decline, Tim is confident that Chile is much better situated to weather the turndown in comparison with other South American countries. This is largely due to the efforts of the government and the private sector to diversity the economy and the increased dependence on commodities by other countries. As we have seen throughout the week, organizations such as Start-up Chile and Cumplo are offering more resources to entrepreneurs for development and financial support. However, the risk of failure is high with nearly 9 in 10 not making it. Tim discussed the difference in the acceptance of failure in the Chilean culture compared to the US culture. With the US having an economic environment encouraging entrepreneurship, coming back from failure is seen as a badge of courage, but this has not translated yet in Chile. This is reflected by the steep price of borrowing from traditional banks for business loans. However, with new resources, encouragement from foreign investment and a determined population, Chileans are slowly changing the culture that will allow them to weather the downturn in China better than their neighbors.
http://www.cnbc.com/2016/03/07/china-releases-trade-data-for-february-yuan-denominated-and-us-dollar-imports-and-exports.html
http://www.coha.org/china-and-latin-america-what-you-need-to-know/
With news that China’s exports fell 25% and imports declined by 14%, many are concerned about the impact on South American economies because of the asymmetrical relationship with China. For example, 40% of the world’s supply of soybeans is imported by China. Of this, nearly 75% is supplied by Brazil and Argentina. China also imports 20% of the world’s copper, a major export for Chile. With so much of the Chilean economy dependent on commodities, how will Chile survive the downturn?
Despite being hit heavily by the decline, Tim is confident that Chile is much better situated to weather the turndown in comparison with other South American countries. This is largely due to the efforts of the government and the private sector to diversity the economy and the increased dependence on commodities by other countries. As we have seen throughout the week, organizations such as Start-up Chile and Cumplo are offering more resources to entrepreneurs for development and financial support. However, the risk of failure is high with nearly 9 in 10 not making it. Tim discussed the difference in the acceptance of failure in the Chilean culture compared to the US culture. With the US having an economic environment encouraging entrepreneurship, coming back from failure is seen as a badge of courage, but this has not translated yet in Chile. This is reflected by the steep price of borrowing from traditional banks for business loans. However, with new resources, encouragement from foreign investment and a determined population, Chileans are slowly changing the culture that will allow them to weather the downturn in China better than their neighbors.
http://www.cnbc.com/2016/03/07/china-releases-trade-data-for-february-yuan-denominated-and-us-dollar-imports-and-exports.html
http://www.coha.org/china-and-latin-america-what-you-need-to-know/