Exploring Business Opportunities Between Peru and China

Professor In Santi Huaranca welcomes students, authorities, and colleagues from the Faculty of Administrative Sciences and Human Resources to the 16th Business Exchange Conference. The conference aims to critically evaluate best business practices and public management experiences. It provides an opportunity to learn firsthand about business practices, management perspectives, and enrich academic and professional knowledge.

The conference will discuss the significance of China in the current global scenario. China is a major economy, a key destination for Peruvian exports, and a significant partner in various sectors like mining, telecommunications, and infrastructure. The conference will also explore the 14-year-old trade agreement between Peru and China, highlighting the commercial relations and business opportunities between the two countries.

Luis Miguel Cabello Arroyo, a seasoned professional with over 30 years of experience in international trade and negotiations, is the speaker for the conference. He holds a degree in Business Administration from the University of Lima and an MBA from UPC. Currently serving as the Economic and Commercial Counselor of Peru in Beijing, China, he oversees activities related to exports, tourism, and investments, including trade missions for APEC 2024.

Before the presentation begins, attendees are reminded to stay in the room and pay attention as the conference is an academic activity. Students are required to prepare a conference review for their course instructors. Questions from participants will be managed by the host and answered by the speaker at the end. The video conference is being recorded on Zoom and streamed live on the USMP YouTube channel.

The speaker, a commercial counselor in Beijing, China, with previous experience in New Delhi, India, highlights the importance of understanding business culture in China. He emphasizes the need to share insights on business operations and errors in foreign trade due to a lack of knowledge. The speaker aims to provide valuable tips based on his extensive experience in international commerce.

The speaker expresses gratitude to the university and requests confirmation of audience attentiveness. He acknowledges the presence of the San Martín de Porres University and mentions his past teaching experience in Santa Anita. The speaker prepares to delve into topics such as market opportunities, exports, tourism, investments, and business culture in China.

The speaker underscores the role of commercial offices in promoting exports and supporting Peruvian businesses. He emphasizes the importance of these offices in facilitating trade, increasing visitor traffic to Peru, extending visitor stays, attracting investments, and safeguarding the country's brand. The speaker encourages future exporters and importers to leverage the services provided by these offices for successful international trade.

Promperú's commercial offices in Peru have a wide network abroad, inviting participation. Information on active commercial counselors is available on Promperú's website for addressing market queries.

China, as the world's second-largest economy and population, is Peru's primary trading partner. Over the past 10-11 years, China has consistently been Peru's major exporter and supplier, showcasing significant economic growth and development.

While China took time to establish itself as a crucial market for Peru, India is emerging rapidly and should not be overlooked. India, with its growing economy, presents a significant market opportunity akin to China's trajectory.

In China, online transactions are ubiquitous, with mobile phones serving as the primary mode of payment for various services like utilities, transportation, and shopping. Cash transactions are increasingly rare, emphasizing the importance of digital payments in the Chinese market.

China has an impressive internet penetration rate of nearly 80% of the population, with millions of users connected online. This high connectivity facilitates rapid logistics and online transactions, supported by banks. The country's online market is vast, with a significant amount of money moving through online platforms.

In China, online purchases are efficiently delivered within hours, with products packaged appropriately for quick transportation, even via motorcycle. This streamlined process ensures that goods reach consumers promptly, whether to their office or home.

E-commerce in China goes beyond traditional websites, with a focus on social media platforms and active shopping channels. Live promotions and influencer marketing play a crucial role in driving sales, with influencers and community leaders endorsing products to reach a wide consumer base.

WeChat, a popular messaging app in China, offers a comprehensive range of services beyond communication, including gaming, payments, and investments. Its widespread usage reflects the high level of internet connectivity and digital integration in the country.

China's vast size and geographical diversity make it akin to a continent rather than a standard country. Understanding China's diverse regions is crucial when considering market strategies, as each area may have distinct consumer preferences and logistical challenges.

The speaker discusses the idea of exporting products to cities like Beijing, Shanghai, New Jersey, and Miami. They emphasize the importance of considering territorial limitations when presenting export projects. Additionally, they mention the requirement set by the university for export project presentations.

Peru has been experiencing a trade surplus with China for many years, with exports surpassing imports. The speaker highlights the growth in both purchases and sales between Peru and China, indicating a positive trend that is expected to continue for a long time.

The agricultural sector in Peru has seen significant export growth, particularly in products like blueberries, grapes (specifically the red glow variety), avocados (due to health benefits), and tara derivatives. The speaker explains the unique qualities of these products that appeal to the Chinese market.

China is the second largest importer of fresh fruits, with a growing demand for citrus fruits. The speaker mentions the prevalence of citrus fruits in the market and highlights the increasing popularity of products like lemons. They also discuss the diverse uses of tara derivatives, such as emulsifying agents in food products like ketchup, soups, and mayonnaise.

Peru is a major player in fruit exportation, with significant exports of grapes and avocados. The size and type of avocados in Peru differ from those in other countries, where individual-sized avocados are preferred. Additionally, Peru is a leading supplier of quinoa, known for its nutritional benefits and quality, preferred over other varieties produced elsewhere.

Peruvian exports are facing challenges in Asian markets due to increasing competition in products like quinoa. While other countries are cultivating quinoa, the nutritional and quality standards of Peruvian quinoa remain unmatched. Similar challenges are seen in the production of maca and giant corn from Cuzco, where the unique characteristics of these Peruvian products set them apart from imitations grown elsewhere.

Peru offers unique products like giant corn from Cuzco, which captivates foreign markets with its size and taste. The novelty of these products, such as giant corn and maca, presents opportunities for Peru to showcase its natural, non-genetically modified produce to international consumers.

Sacha inchi and avocado oils offer various health benefits beyond prostate health. These oils can help reduce cholesterol levels and provide essential nutrients. It is essential for young individuals to start incorporating these oils into their diets early on to maintain good health in the future.

Barbasco root is utilized in some parts of the Peruvian jungle for fishing and as a natural insecticide for organic farming. Its properties make it a valuable resource for maintaining organic crops and promoting sustainable agricultural practices.

Peruvian pisco producers should explore commercial opportunities in Asian markets to expand their reach. The unique qualities of Peruvian pisco can appeal to international consumers, presenting a chance for growth and market diversification.

Exploring new markets like China is crucial for understanding liquor commercialization. Argentine and Chilean wines are already popular in Chinese supermarkets, indicating a potential market for Peruvian liquors. There is an opportunity to adjust prices to meet Chinese market demands and establish a presence as a major importer of alcoholic beverages.

Peru is a significant supplier of fishmeal and fish oil to China for various uses, including animal feed production. Despite a data error regarding the export value, Peru contributes substantially to the fishery sector. Fishery products like dried seaweed and flying fish roe are gaining traction in the Chinese market, showcasing the diverse export potential of Peru.

China exhibits high demand for hydrobiological products like fish and seafood, with supermarkets and restaurants prominently featuring fresh seafood displays. Peru's exports of products like langostinos, algae, and flying fish roe cater to this demand, highlighting the growing market for hydrobiological goods in China.

Peru's export of pota, used for calamari rings, is experiencing a significant surge in demand in the Chinese market. Additionally, the export of flying fish roe products is steadily increasing, indicating a growing preference for Peruvian seafood products in China.

Chinese consumers prioritize product origin, digital information, health, organic, and sustainable attributes post-pandemic. This shift in consumer behavior presents opportunities for premium products like Peruvian quinoa, known for its quality and authenticity, to thrive in the Chinese market despite higher prices due to consumer appreciation and purchasing power.

Young couples in China are avoiding spending too much time cooking and prefer ready-to-eat meals. The market demands high-quality products due to digitalization and communication trends. Products need to be adapted for quick consumption at home, catering to a new generation focused on health, biodegradability, and sustainability.

Packaging plays a crucial role in attracting Chinese consumers. Colorful and eye-catching packaging is preferred over plain designs. White packaging symbolizes death and should be avoided. The market is embracing gastronomy from other countries, emphasizing the need for appealing packaging and product presentation.

Products targeting the Chinese market should prioritize quality, cleanliness, health benefits, and affordability. Long-term supply, certifications, and shelf life considerations are essential. Diversification of product offerings is crucial to meet evolving consumer preferences.

The Chinese market presents a growing opportunity for specialty coffee, despite its tea-drinking tradition. Speciality coffees offer higher profitability compared to conventional options. Promoting unique coffee varieties tailored to Chinese tastes can lead to success in this expanding market.

Investing in the Asian markets requires a significant financial commitment and patience. It is crucial to have patience when dealing with Asian markets, as immediate profits should not be expected. The new generation in Asia is interested in exploring new flavors, products, and beverages beyond traditional options like green tea.

There is a growing demand for new flavors, products, and beverages among the younger demographic. While green tea remains popular, there is a trend towards exploring diverse options. Hot beverages are consumed year-round in Asia, with coffee showing great potential in the fashion sector.

China presents lucrative opportunities for the Peruvian market, particularly in the textile sector. Alpaca fibers are highly valued, with a potential market for high-quality fibers like alpaca and vicuña. Despite competition from cashmere, there is a niche market in China willing to pay for premium Peruvian textiles.

Accessories, coats, and sweaters are expected to be in high demand in the Chinese market. Additionally, there is a growing interest in alpaca toys, reflecting a broader trend towards sustainable and luxury products. Quality, certifications, and timely delivery are crucial factors for importers in China and other markets.

Understanding Chinese culture, history, and business etiquette is essential for successful trade relations. With over 5,000 years of history, China values quality, certifications, and timely delivery. It is important to adapt to Chinese sizing standards in the textile sector and meet all quality requirements to succeed in the market.

When conducting business in China, it is important to be patient as responses may not be immediate. Meetings and decisions are often made after careful consideration in a group. Additionally, be mindful of Chinese holidays such as the Chinese New Year and National Day, which can impact business operations.

Prior to a business meeting in China, it is advisable to seek contacts who can assist in securing appointments. If unable to find contacts, reaching out directly to the company of interest is an option. It is crucial to schedule meetings well in advance, whether in person or via video call, and clearly communicate the agenda to ensure engagement with the right stakeholders.

Punctuality is highly valued in Chinese business culture. Arriving late should be communicated in advance with sincere apologies. Follow-up communication to confirm arrangements is essential. During in-person meetings, expect to be offered hot or warm water as a gesture of hospitality, along with tea. Express gratitude by tapping knuckles together and saying 'Thank you.'

In China, it is common to have multiple dialects, necessitating the use of translators in most cases. Before discussing business matters, engage in small talk about the visit, city, or traditions. Avoid sensitive topics like politics. When meeting in person, wait to be directed where to sit as a sign of respect and courtesy.

During business interactions in China, be prepared for interruptions during phone calls. Invitations to meals are common and should be accepted graciously. Expect continuous refilling of your cup as a sign of courtesy. Express gratitude and respect through traditional gestures like tapping knuckles and saying 'Thank you.'

When invited to someone's home in China or India, it is considered an honor and a luxury. Dress code for men typically includes a suit and tie, while women should avoid revealing clothing like low-cut tops or short skirts. Both men and women should dress modestly as a sign of respect. In India, the greeting involves a handshake, while in China, it is customary to greet with a bow or a 'namaste' with both hands. Avoid kissing a lady as a greeting, and always present and receive business cards with both hands.

The appropriate attire for business meetings varies depending on the sector. For example, if attending a meeting at a wholesale market, wearing a suit may not be suitable due to the strong odors. It is essential to consider the climate as well, as temperatures in India can range from extremely cold in winter to very hot in summer.

In corporate settings in China and India, hosts are exceptionally hospitable and attentive to guests. They will accompany guests from the entrance to the meeting room and ensure they are well taken care of. Guests are expected to show respect by following seating arrangements and showing deference to senior members. Business meetings in these countries often reflect Confucian values of respect for elders and hierarchy.

When exchanging business cards in China and India, it is essential to use both hands and present the card facing the recipient. Avoid putting the received card in a pocket or back pocket, as it is considered disrespectful. Gifts should be handled with care, and if unsure, it is best to let the university handle the gifting process.

When giving gifts, it is advised not to be ostentatious. Instead, opt for something nice, friendly, and preferably with a touch of tradition. For example, Peruvian handicrafts are well-received. The wrapping should ideally include auspicious colors like red, yellow, and gold, as they symbolize prosperity. Avoid white as it signifies death and never give gifts in multiples of four, as it is considered unlucky. Numbers like six or eight are preferred as they symbolize prosperity.

Recommended gifts include fruits, ornaments, chocolates, or a fruit basket. It is important to avoid items like watches, handkerchiefs, or anything sharp, as they may not be well-received. The key is to choose something thoughtful and not overly plain.

Respect for elders is emphasized, as they are valued for their connections and experience. When interacting with older individuals, it is common for them to be helpful and offer guidance, as their age and wisdom are respected in Peruvian culture.

Patience is crucial when dealing with Chinese partners, as immediate responses are not expected. Building a long-term relationship is the goal, and understanding cultural nuances, such as the diverse ethnicities and languages in China, is essential. Additionally, using a VPN for communication due to restricted access to platforms like Google, email, Instagram, and Facebook is recommended.

A lack of knowledge in foreign trade can lead to problems and disputes. It is crucial to understand the intricacies of international commerce to avoid issues and potential financial losses. Taking foreign trade seriously, whether in university studies or professional endeavors, can prevent headaches and ensure successful business operations.

Contracts are crucial in business to reduce risks. An accepted offer, purchase order, or order constitutes a contract. When sending a proforma, include sales or purchase conditions clearly. Understanding contracts helps in minimizing losses in business.

Understanding Incoterms is essential for exporters and importers. Incoterms specify conditions for selling under defined terms. Import terms like CIF include minimal insurance coverage, necessitating additional insurance to cover any gaps. Consider insurance costs in pricing to mitigate risks effectively.

To reduce risks in international trade, utilize payment methods like letters of credit or documentary collections. Analyze and understand associated bank fees to assess if they align with your business profitability. Choosing secure payment methods is crucial to avoid common trade errors due to lack of knowledge in international commerce.

Product certification by a third party is vital to ensure you are selling or receiving the correct goods. Certification helps in verifying product quality and specifications, preventing issues like receiving contaminated goods. Certification adds a layer of trust and assurance in international trade transactions.

It is crucial to have clear terms in business dealings. Contracts, payment methods, and insurance are essential. One must be prepared for any risk, no matter how small, as even a 0.0001% chance can occur. Supervision and precautions are necessary to mitigate risks.

When seeking clients in China, it is recommended to contact foreign commercial offices. These offices have lists of pre-vetted companies that can be valuable. While online platforms provide some information, it is limited. Utilizing university resources, competitor information, chambers of commerce, and commercial offices can be beneficial in finding potential clients.

The speaker expresses gratitude to the attendees, professors, and faculty for their presence. Certificates and recognition plaques will be delivered as a token of appreciation. The conferences are being recorded and shared on the university's Zoom channel on YouTube.