From smartphones and automobiles to the internet, Chinese enterprises are accelerating their entry into Brazil, a country with high tariff barriers, through capacity landing. In this process, Chinese enterprises will inevitably have to cede some benefits, but this is both a moral choice and a consideration of long-term interests. For many developing countries, China brings technological transfer, which is key to increasing national income, and the new consumer demands created by this will ultimately be shared by Chinese enterprises. Especially in the current situation where the US government is waving the banner of isolationism, exposing its selfish and self-interested way of thinking, China has the potential to occupy the moral high ground through mutually beneficial and win-win cooperation, jointly establishing an independent and autonomous new trade system with the Global South countries.
With the factory in Manaus City completed at the beginning of the year and successfully trial-produced, last month, vivo officially entered the Brazilian market under the brand name JOVI. Thus, mainstream Chinese smartphone brands such as Xiaomi and OPPO have finally gathered in Brazil.
This might seem surprising. As a large market with a population of 200 million, why does the pace of Chinese brands entering Brazil appear somewhat sluggish?
On October 1, 2023, iconic buildings in São Paulo, Brazil, were lit up in "China Red." CCTV News.
In fact, it's not just Chinese brands that are struggling in the Brazilian market. Even Apple finds itself in a difficult position due to the high and complex tax policies. South America is widely regarded as one of the most difficult markets to enter globally, with Brazil being particularly representative.
However, recent years have seen significant changes. Recently, Didi announced the restart of its food delivery plan in Brazil, while BYD and Great Wall Motors are expanding production capacity in Brazil on a large scale.
The reason lies not only in the一贯 good relations between the Lula government and China, but more importantly, because the strategies of Chinese enterprises going abroad have changed dramatically, shifting from simple selling to investing in factories.
When the United States wielded the "reciprocal tariff" cudgel causing supply chain disruptions, such cases are particularly worth studying—Trump's trade protectionism escalated into capacity protectionism, attempting to force global capacity back to the U.S., while there are occasional voices in China opposing enterprises building factories overseas.
However, amidst the tide of Chinese industrial exports, the host countries can indeed enjoy advanced manufacturing technology transfers, while China also gains extensive product markets and complementary supply chain synergies, even greater political benefits.
This dual narrative of technological infiltration and industrial synergy still brings hope amid the gloomy global trade, providing new possibilities for the Global South to jointly resist trade risks.
Rational Choices in a Distorted Structure
Despite years of disappointing economic growth rates, Brazil can be considered a regional power in terms of population size and economic volume. Particularly in many social development indicators, Brazil exceeds the levels reflected by per capita GDP.
For example, in 2022, Brazil's urbanization rate reached 87.6%, ranking ninth globally, higher than the 83.1% of the United States. Brazil also boasts a high level of social welfare, with free healthcare covering 75% of the population, which makes Brazilians' consumption levels exceed those of other developing countries.
According to official statistics from Brazil, the smartphone penetration rate in Brazil is 85%, comparable to China's.
A global survey conducted by mobile data analytics platform AppAnnie in 2022 revealed that Brazilian users spend an average of 5.4 hours daily on their phones, ranking second in the annual statistics. Clearly, the Brazilian mobile phone market is a tempting cake.
However, so far, the Brazilian mobile phone market presents a duopoly structure. In 2021, Samsung held a 44% market share, firmly at the top, dominating the high-end market, while Motorola held a 33% market share, sharing the mid-to-low-end market. Even Apple, with a market share of only 8%, struggles in comparison.
Such an unusual structure stems from Brazil's strong inclination toward industrial autonomy.
To protect domestic industries, Brazil imposes high tariffs on imported goods, with composite tariffs on imported phones ranging from 35% to 60%. The starting price of the iPhone 15 standard edition released last year in Brazil was 7,299 reais, equivalent to approximately $1,400 based on the exchange rate at the time, 75% higher than the global market price of $799.
Samsung established a mobile assembly plant in Brazil as early as 1999, with over 6,000 workers today, thus enjoying much lower tax rates, making its cost-effectiveness far superior to Apple.
Foxconn began joint ventures in Brazil in 2011 but has yet to meet expectations in terms of production capacity, only able to produce older models of iPhones, resulting in Apple's relatively weak position in Brazil.
This distorted duopoly structure is purely a result of tariff policies and does not mean consumers lack demand for other brands.
In addition to Lenovo, which took over Motorola, Xiaomi is one of the relatively successful Chinese smartphone manufacturers in Brazil. In 2015, Xiaomi first entered the Brazilian market, but it failed within a year due to high tariffs. However, Xiaomi phones smuggled into Brazil have since gained popularity in the black market due to their extremely high cost-effectiveness.
Since 2019, Xiaomi's market share in Brazil has been gradually rising through the expansion of offline stores.
In recent years, Chinese brands have collectively intensified their efforts in the Brazilian market. Xiaomi, OPPO, and now vivo have all announced local assembly plans. Chinese smartphones are expected to see a breakthrough in Brazil.
Behind this success, apart from Chinese smartphone manufacturers, Brazilian local industries also benefit. OPPO's contract manufacturer is Brazil's Multi Group, which has become a stepping stone for numerous Chinese enterprises entering Brazil; previously, Hisense also entered Brazil through cooperation with Multi.
The entry of Chinese internet companies has also driven progress in Brazil's digital infrastructure. In 2018, Didi entered Brazil's ride-hailing market by acquiring a local company, "99," to comply with regulations. By dispatching a large number of Chinese engineers, it significantly enhanced the technical team locally. This year, Didi further expanded its food delivery business through the "99" platform and achieved a closed-loop digital payment through the "99Pay" digital wallet.
As a regional power with a large number of poor people, Brazil's tariff policies may seem distorted, but they are a rational decision when viewed from a sympathetic perspective, safeguarding the development rights of 200 million people.
By supporting domestic industries through high tariffs, Brazil has successfully cultivated world-class enterprises like Embraer (aviation) and Marcopolo (buses), but at the cost of limited consumer choices and innovation vitality. Nowadays, with Chinese tech companies entering Brazil through technological cooperation, the diversification of local industries is significantly improving.
Chinese enterprises are increasingly benefiting from localization.
For Chinese enterprises, entering overseas markets through investment or acquisitions inevitably involves certain risks or the need to cede some benefits. However, such cooperation can also bring benefits to Chinese enterprises.
Transsion's success in Africa has already proven that although Chinese smartphone brands are inherently highly cost-effective, achieving success in the vastly different global market also depends on a deep understanding of local consumer needs.
Such experience is equally applicable in the Latin American market.
Motorola's local R&D center in Brazil is located right next to the factory in São Paulo State, facilitating communication and collaboration between researchers and factory staff. They have developed products that better suit the tastes and needs of South Americans in areas such as phone design, camera color, and interaction software.
Buniaq, President of Motorola globally, once introduced that Motorola phones launched in Brazil support two local indigenous languages, feature built-in digital banking due to the widespread lack of bank accounts among Brazilians, and even released phones with fragrances favored by Brazilians.
OPPO also has profound insights into the "odd" demands of Latin Americans. In the Mexican market, to cater to users' strong demand for social display, OPPO specifically added a function to simultaneously record videos with both front and rear cameras and collaborated with América Móvil to launch "soccer-themed" AI imaging features.
The "localization" strategy is also helping Chinese enterprises penetrate higher-barrier developed markets.
In 2024, for the first time in history, the share of Chinese flat-panel TVs in the Japanese market exceeded 50%, with Hisense alone reaching 41.4%. For Japan, which was once the technical high ground for TVs and panel industries, this marks a historic turning point.
It should be noted that Hisense became the top brand in Japan's TV market mainly due to the evolution of the former Toshiba TV division into REGZA.
In 2018, Hisense officially acquired Toshiba's TV business, but at the time, this business had a debt-to-equity ratio exceeding 100% and was still incurring losses, with the purchase price being only 355 million yuan, considered a risky gamble by outsiders.
However, Toshiba's technological accumulation remains, especially its brand influence in the Japanese market, which cannot be easily replaced by Chinese enterprises. After Hisense took over Toshiba's TV business, it helped it break away from rigid operational thinking through organizational restructuring, making the newly formed REGZA a valuable asset.
In the home appliance industry, Haier is also a successful case of the "localization" strategy. As early as the last century, Zhang Ruimin proposed Haier's "one-third strategy": one-third domestic production and sales domestically, one-third domestic production and overseas sales, and one-third overseas production and overseas sales. Today, Haier's global market sales stand out uniquely among Chinese home appliance brands.
Escaping Zero-Sum Games, Vast Horizons Ahead
Trump's essence of launching a "tariff war" is to view international trade, particularly capacity deployment, as a zero-sum game. Amidst the continuous decline of American manufacturing, such logic has won the support of many American conservatives.
However, if we shift our perspective to the world's largest industrial nation, China, Trump's logic no longer holds.
In recent years, Chinese enterprises have accelerated their capacity exports. Some of these actions are passive responses to the U.S. "decoupling" policy, but more are proactive pursuits of incremental markets.
In the past twenty years, as the market with the strongest purchasing power globally, the U.S. has attracted a large number of Chinese enterprises. However, in other regions of the world, the expansion of Chinese enterprises remains insufficient.
Take home appliances as an example. According to Euromonitor data, in 2023, Haier ranked first in the North American home appliance market with a market share of 12.1%, but in Western Europe and the Japanese-Korean-Australian-New Zealand markets, Haier only ranked fourth and fifth. For these two markets, local powerful native brands exist, making local cooperation a highly efficient way for Chinese enterprises to seek increments.
In vast developing countries, not only in Brazil, but also in India and Southeast Asian markets, have long been firmly controlled by Japanese and Korean enterprises. Starting from the 1960s and 1970s, Japanese and Korean enterprises began to widely establish overseas manufacturing capacities due to rising labor costs in their own countries. Previous reports by The Good Review mentioned that Japanese automobile enterprises not only monopolized Thailand's market sales but also deeply shaped the local supply chains and financial systems, creating enormous obstacles for Chinese enterprises entering the market.
Therefore, for countries with strong manufacturing capabilities, encouraging the outflow of manufacturing capacity will not harm their own industries but can instead gain broader markets and fully utilize global resources to strengthen their leadership positions in the global industrial chain.
For developing countries, supporting domestic industries has increasingly become a consensus. In recent years, India, Indonesia, and other countries have set higher barriers for foreign enterprises, encouraging industries to take root in their own countries. Objectively speaking, this is not an unreasonable requirement but a common pursuit of all ethnic groups that have experienced colonial history.
Compared to former colonizers, China's more equal and open cooperative approach naturally wins favor more easily.
János Katona, Hungary's Minister of Foreign Affairs, recently publicly stated that thanks to electric vehicle-related enterprises from China, Hungary has become the world's second-largest electric vehicle producer, but China has never used its status as the largest investor to influence Hungary's political direction.
Instead, in China-EU disputes over automobile trade, Hungary spontaneously stands on China's side, providing precious support for China's trade and diplomacy.
In an interview with The Late Post, Lin Xueping, an industry expert, mentioned a counterexample: a Chinese home appliance equipment company built a factory in India, feeling that the local employees were too slow, so it assembled the equipment domestically before disassembling it and transporting it to the local site, even bringing its own workers to work around the clock. Such practices did not provide sufficient opportunities for Indian workers, and the enterprise later faced contract audits and account inspections by the Indian government.
Only by sharing the opportunities of industrial development with the local area can both parties win. This is both a moral choice and a consideration of long-term interests.
In the face of domestic industries continuously engaging in low-price "internal competition" and the U.S. government insisting on "decoupling," Chinese manufacturing urgently needs to find new demands. These demands are not static, waiting to be discovered, but rather need to be created dynamically.
China's history of reform and opening-up is the best model for creating demands.
In 1984, Volkswagen entered China through a joint venture and later became the most successful joint venture brand in China. However, that year, China's total car production was 316,400 units, with only 6,010 units of passenger cars.
In the following decades, thanks to the advanced technologies and management methods brought by joint ventures, China's domestic industrial chain rapidly rose, and national consumption capacity improved synchronously. By 2024, Volkswagen Group delivered 2.93 million vehicles in China, making the Chinese market the largest single market for Volkswagen worldwide. Not only did Volkswagen not suffer from technological transfer, but it also strengthened its research and development layout in China, becoming one of the fastest international automakers in electric and intelligent transformation.
Facing Trump's isolationism, China does not need to fall into the trap of "zero-sum game" thinking but is instead welcoming a historical opportunity. By adhering to the export model of mutual benefit and win-win, Chinese enterprises can not only obtain broader growth spaces but also collectively build a new global trade narrative, co-creating a more benign global southern trade system with international partners.
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