Multiple Asian machinery producers say they've never received as little interest from fair-goers as at Argenplás, where the Argentine government's recently imposed trade barriers on foreign goods have discouraged local buyers from shopping outside Argentina and neighboring nations in the Mercosur pact.
The import restrictions strike Asian producers and traders more than any group because they've enjoyed the largest part of Argentina's increased demand for capital goods in recent years. Argentina's 2011 investment in machinery and equipment, molds/dies and parts topped US$222.3 million, up 16.6 percent from the year prior.
At 21.3 percent, China was the main origin country for capital goods imports. In the mold/die category, US$61.2 million worth were imported in 2011, led by China (24.5 percent), with Asian producers Japan (9.2 percent) and South Korea (8.7 percent) increasing their market shares.
With 2.65 million pounds per month of thermoplastic urethane variations produced for shoemakers in Southeast Asia and Brazil, Sun Yang Global Co. Ltd. of Dali City, Taiwan, was enthusiastic about Argentina's growth potential when it booked a booth for Argenplás earlier this year.
But with the onset of tariffs and trade restrictions, the peso's rapid inflation against the dollar and few fair-goers showing interest despite a lack of domestic TPU sources, Dora Yang, Sun Yang spokeswoman at the fair, said the message she'll need to take back to her boardroom is clear: “Argentina isn't worth it.”
“It's the only thing I can say now to [my bosses] about Argentina,” Yang said. “The import issues, the restrictions, they appear to be too much.”
Hwasung, South Korea-based hot-runner producer Yudo Co. Ltd. invested US$10 million to open its first South American factory in April, in Brazil. The company said it plans to invest a total US$120 million over the next four years in Brazil to serve Latin American demand. It's one of a small but growing number of Asian machine and parts producers biting the bullet on South American production to be able to trade with Mercosur nations more easily.
But despite that investment, sales to Argentina of one of Yodu's most-requested parts, a thermal heater for plastic molding, have been cut off by the trade policy because one Argentine company makes the same part, said Robson Gaspar, Yodu's Brazilian commercial director.
Chiayi, Taiwan-based extrusion line producer Kung Hsing Plastic Machinery Co. Ltd., which has one customer in Argentina and more in neighboring countries, can no longer beat Argentine competition on price after tariffs are applied. But the company may now go the extra mile to win over potential clients.
Kung Hsing will consider flying interested Argentine buyers to other parts of South America early in the sales process to see its machinery in action, and will offer larger stocks of reserve parts to new customers than in the past, to assuage worry over future denial of parts orders by the Argentine government, said Wendy Hsiao, vice sales manager.
In the end, standard add-on taxes and new non-compete tariffs can add as much as 40 percent to foreign machinery's price for an Argentine buyer, said Thomas Haberl, Argentine sales agent for China-based Changzhou Yongming Machinery Manufacturing Co. Ltd.
“There's no local competition in Argentina for most of these large machines, but if it's from Asia and requires a lot of [dollars], that pretty much dooms it” for pre-import authorization, Haberl said.
Buenos Aires-based injection molding machine producer Fabro Hnos, which also imports large injection presses with clamping forces of up to 3,300 tons from a Chinese partner, may have found the solution to getting foreign machines into Argentina.
Fabro has been talking with the government about allowing the import of disassembled injection presses from Chinese partner Ningbo Haida Plastic Machinery Co. Ltd., then assembling them locally with a few basic parts sourced within Argentina. Fabro's dangling carrot that may draw government approval: a promise of 20 new, local jobs.
“We wouldn't need a lot of time or infrastructure to get this going,” said Leandro Fabro, international trade director. “The cost is just assembly, and that means space, some hands and knowledge of the machine.”