From Xico

Dragon Mart, The Who and What of: The Chinese part.

In a previous post, I gave a pretty general view of the Dragon Mart project for Cancún.  Now for some specifics about the project itself.  

Originally introduced in 2011, the project was originally to have China provide a large minority of the financing.  However, due to successful objections, obvious Chinese-related funds now only account for ten percent of the funds.  So let's start with that.

Chinamex:

According to a company profile, Chinamex

[S]ince 2000,  has been an important overseas window in helping Chinese enterprises with implementing global strategy, the creation of internationalized brands, and the development of diversified exporting markets for Chinese products. Meanwhile, Chinamex is also an important window for foreign companies to enter China. 

Now, Chinamex has already created China’s largest overseas trade platform, providing quality and efficient services for Chinese and foreign companies in the specialized areas of international exhibitions, commodities trade, Chinese company and city internationalization, business and investment attraction, and trade. Thousands of Chinese companies have entered the international markets via Chinamex. At the same time, Chinamex has explored direct investment in iron ore, oil and petrochemicals trade, and other international business domains.

Chinamex also plans "the internationalization of cities."  This means the organization examines the industrialization and government plans for Chinese cities to be able to find appropriate overseas targets for its goods.

Is Chinamex the Chinese government/in disguise?  Well, to some extent for sure.  It was created under the Chinese Ministry of Commerce Overseas Management Center.  Hao Feng, the president, was previously the Vice Minister of Commerce (of course USAers can't complain too much about government-private enterprise revolving doors).  Mr. Hao said, interestingly enough, "Most of Mexico's imports come from Japan, India, South Korea and the US, which can cost three to five times more compared to the Chinese goods in the Dubai Dragon Mart [The other and earlier Dragon Mart]."  This is a clue to one of the problems with the invasion of Mexico by China: Chinese wages are far lower than even those in Latin America, and the labor market in China is huge.

By the way, Chinamex is not an acronym (or wasn't originally) for China and Mexico but is an acronym devised after a change initiated following the establishment of the Dragon Mart in Dubai. 

The Chinese Ministry of Commerce’s foreign trade development bureau is responsible for the development and promotion of Dragon Marts. 

Also important to note is that China is exploring "direct investment in iron ore, oil and petrochemical trade...," in other words, the importation of primary materials which China lacks.

Another Chinese figure involved and mentioned frequently in the context of Chinamex-Dragon Mart Cancún is Zhenli Ye Gon, though I'm not sure exactly what his connection with Dragon Mart is.  Zhenli, however, is without doubt an intriguing person.  He is currently in the United States, awaiting extradition to Mexico.  He was born in Shanghai in 1962 and became a Mexican citizen in 2002. Much of the stuff written about him is well-known.  He reportedly began his career selling stuff seized by Mexican customs.   Next, he started and headed a company called Unifed which legally imported pseudoephredine from China to Mexico for the purpose of manufacturing anti-congestion medications.  However, after he'd imported his legal allotment, he continued to import it. Just in case you don't know, this drug is the basis of methamphetamines.  This led to charges that he was associated with the Sinaloa drug cartel, etc. etc.  In any event, he went to Las Vegas where he reportedly lost 1.25 million dollars gambling.  He was (reportedly, of course) given a Rolls Royce in exchange for his losses by the casino which was  The Sands, or part of The Sands group owned by (surprise) Sheldon Adelson of Mitt Romney (and Israel) fame.  ANYWAY, he was arrested in the US.  Charges against him were dismissed (under protest) but as I understand it, as I said, he remains in US custody awaiting extradition to Mexico, whether in prison or not, I am not certain.  

Sr. Zhenli has interesting connections with Mexicans associated with Dragon Mart Cancún. These will have to wait for the next episode.

Meanwhile, below is a picture of millions of dollars found in (one of) Sr. Zhenli's house(s) in Mexico.

This is part of a seizure of his property by Mexican police.

Among other connections, it appears, interestingly enough, that some of Sr. Zhenli's money may have been laundered through HSBC.

Enough for now.

 

 

 

 

Globalization Issues: A Little Preliminary Information before More Dragon Mart

First of all, something really off the subject.

I just wanted to mention our walk this morning.  We went on the hilly back road from the edge of our Colonia towards Agualegre and Coatepec.  After a day of cold rain and then a chilly day which turned cloudy and again rainy, this morning was glorious.  We crested the last uphill and saw that there were new cattle on the downhill side behind an old wooden fence, all female, brown ones and holstein-like ones, except for one enormous black and white bull who looked like he might be a brahma-holstein cross. He had a huge hump, long dagger shaped ears drooping along the sides of his head and a face that looked, with its slanting almond-shaped eyes outlined in black, like a Japanese mask.  One of the females nestled against him and licked him affectionately.

Now some broad context for Dragon Mart.

Globalization has included not simply lowering tariffs among nations, but opening trade, legal and illegal to a somewhat unfettered international market.  The distinctions between legal and illegal trade have blurred with a gray area spreading so that it doesn't simply exist between legal and illegal trade, but the illegal seeps into the legal.  This means, for instance, that the narrow focus the US puts on narcotics coming from Mexico is really pretty dumb. Militarization of the "drug war" vs. Mexican narcotics is probably even dumber and more self-defeating.  There is a fair amount of good literature on this literally vast subject, but it hasn't permeated the mainstream media in the US very far as far as I can tell.  One of the writers I have looked at is Moíses Naím, a PhD from MIT who was for many years editor of the journal Foreign Policy.  He is currently a Senior Associate in the International Economics  program at the Carnegie  Endowment for International Peace and Chief International Columnist for El País, Spain's largest newspaper. He has won many honors and has a world-wide reputation for excellence and insight.  His book, Illicit, published in 2005 describes the growing international trade in drugs, arms, money laundering and human beings which now transcends national borders.  It operates, he says, rather the way terrorist groups do, floating from place to place and in many places, and it is probably more of a threat to international stability than terrorism.

Many groups and individuals and companies and even countries that may be or seem to be legitimate drift into or walk into or embrace gray and illegal activities.  The bank HSBC's money-laundering seems to have been the first kind of problem: HSBC cooperated with investigators and seems not to have been cognizant of how its bank was being used.  I would suspect many businessmen, including the Koch brothers in the US more than drift into it though I don't know.  

China seems to know all too well how to orchestrate it all as it slips its presence into Latin American countries. Its most obvious effort in Mexico is its Dragon Mart project which has drawn little attention in the US.  So far I've found a rather bland and not completely correct article in The Miami Herald, a better article by McClatchy Newspapers which appeared in the Tacoma News Tribune and other papers  and some mention in the Hispanic press.

More to follow.

The Dragon Mart (Not the WalMart) Monster

There is a novel by Jose Saramago called The Cave set in Spain. In it, a rural potter and his family find themselves selling their wares to a place called The Center.  They slave to make the quotas, and one day, The Center cuts them off cold turkey: no more of your pots.  Finally, the family has to move to The Center to work and to survive.  The Center turns out to be an enormous surrealistic construction which aims to meet all the needs of the workers as well as the shoppers and businessmen  so that they no longer have any desire to return to the real world.  I am abridging here mercilessly.  I only want to say that The Cave reminds me of the Chinese-Mexican plans to build a Dragon Mart near Cancun.  The Dragon Mart is to be an enormous complex 122,000 square meters or 1,310,000 square feet.  In addition to some 3000 commercial locations operated by Chinese businesses, there will be housing for some 700 housing units for Chinese workers.  A lot of things are blurry: how many workers will be Chinese, for instance, vs. how many jobs will be available to Mexicans.  Something like 6000 Chinese are expected to come to work in the complex.  What isn’t in doubt is that the products will be Chinese and will be sold at far cheaper rates than comparable Mexican (or other nations’) goods.  It will probably make WalMart look like child's play.

There are growing objections to the project, as well there should be, especially to the effect on Mexico’s economy and industrial production and to environmental damage.  Random changes foreseen: vast increase in shipping (Chinese) into the area; the use of Mexico as a point from which to ship cheap Chinese goods not only around Mexico to the US, Canada and Latin America without the need for non-Chinese middlemen; the Chinafication of Mexico; the ability of the Chinese to vastly undersell EVERYONE.

The model for this monstrosity is Dragon Mart, Dubai, the biggest shopping and wholesale mart in Dubai, though the Mexican Dragon Mart is to be bigger.  http://www.yadig.com/business/Dubai/Dragon-Mart/19382 describes the Dubai version this way:

DragonMart is the largest trading centre for Chinese products outside mainland China. DragonMart features everything you'd find in mainland China: home appliances, communication and acoustic equipment, lamps, household items, building materials, furniture, toys, machinery, garments, textiles, footwear and general merchandise.

Shoppers describe mountains of junk and mountains of “such-a-deals”, everything you need and don't need, all Chinese.  ALL Chinese.  Of course there is a huge difference between Dubai and the country of Mexico.  Dubai is not an agricultural and industrial country which depends on its own goods at least in part for its survival.

The project seems to have slipped in under the radar in 2011, but recently, people have taken notice.  Initially, mostly Chinese-funded, it is now funded maybe up to 90% by some very rich Mexicans including some from Monterrey.  This will not change the basic nature of the place, but will make some very rich Mexicans richer.  Also the state and Federal governments are starting to stir as are environmental groups.

It will, I suspect, make WalMart seem like child’s play.

Links to some articles in Mexico in Spanish:

http://www.sdpnoticias.com/columnas/2012/10/23/otra-de-felipe-calderon-dragon-mart-can-cun-el-enemigo-en-casa

http://www.excelsior.com.mx/2013/01/19/julio-faesler/880100

http://diariolaverdad.com.mx/divide-dragon-mart-cancun-al-partido-verde/193910/

http://www.ecoosfera.com/2012/11/dragon-mart-cancun-la-destruccion-del-monstruo-chino-llego-a-mexico/

http://www.jornada.unam.mx/2013/01/28/edito

http://www.jornada.unam.mx/2013/01/07/estados/030n1est

I’ve got lots more if  you are interested.

There is more than Dragon Mart to China’s move into Latin America (and points north). China is also now Latin America’s biggest lender. 

More soon.