Chinese Technology’s Growing Influence in Latin America
Source: Pan Daily
Chinese technology companies have grown in scale and confidence and are increasingly looking to influence internet revolutions in other regions across the world. Much has been said about China’s increasing forays into Southeast Asia and India, as these nearby regions are experiencing similar increases in mobile internet penetration to China’s recent evolution. However there remains another frontier of the digital economy that while geographically distant from China, represents a significant opportunity for Chinese tech firms and venture capital. Latin America boasts a population of over 650 million that has experienced significant and continuing alleviation from poverty, and substantial increases in broadband penetration. In fact, between 2000 and 2012, 56.2 million citizens moved out of poverty and the middle class grew from 100 million to nearly 150 million individuals. Meanwhile, the region will account for 10% of all new mobile internet users from now until 2025. While the region might not boast the scale of regions in Asia, there is one less barrier to entry, which is localization.
While India has over 20 unique languages in the country, and Southeast Asia consists of many different countries with different languages, Latin Americans speak Spanish with the only exception being Brazil, the region’s largest market where Portuguese is spoken. While there are dialectic differences throughout the various countries, when it comes to localizing technology products, the lack of language barriers segmenting the market makes the region all the more appealing to overseas tech firms. China’s language landscape is similar, with a dominant Mandarin, and Cantonese spoken in the south.
In Latin America’s largest market, Brazil, where internet users spend an average of over 9 hours on the internet, there have been significant initiatives launched by some of China’s tech giants. Namely, Tencent has invested $180 into Nubank to augment its fintech capabilities, while ride-hailing giant Didi acquired Brazil’s major ride-hailing service, 99, in 2018. 99 in Brazil. Brazil’s mobile internet penetration has reached 66%, and 61% of Brazilian use mobile banking applications, validating Tencent’s investment in Nubank. However, the penetration of mobile payments has only reached 38%, meaning there is significant room for growth. Tencent President Martin Lau said in a statement that the company’s investment in Nubank aims to “build a full-service personal finance platform.” Nubank, founded in 2013, is pioneering the fintech revolution in Brazil by signing up 2.5 million customers to digital payment accounts.