Chinese companies in Nicaragua have been crushing small businesses with cheaper but much lower-quality products, causing a reduction in local sales of up to 70 percent in some areas of the country, independent Nicaraguan daily Confidencial reported.
“This deepened when China and Nicaragua signed a free trade agreement in 2023,” Fabián Calle, professor of International Relations at Argentina’s Austral University, told Diálogo on June 25. “This is how their bilateral relations increased, after the Ortega-Murillo dictatorship broke ties with Taiwan and aligned itself with Beijing.”
Confidencial conducted a report interviewing Nicaraguan merchants, whose chief complain is that they cannot compete with Chinese products, which are sold at retail prices lower than what they can get at wholesale in the local market.
The Chinese companies sell appliances, furniture, household, and office items, as well clothing, cosmetics, and beauty products. They offer their products at up to half the price that Nicaraguan entrepreneurs, mostly family-owned stores, can.
The expansion of Chinese stores in Nicaragua began in Managua, in the Oriental Market, the largest in Central America, which covers approximately 88 hectares and receives an average of 100,000 visitors per day, news site Desde Nicaragua reported.
New stores also opened in main avenues, shopping malls, and central places of the capital, offering products of all kinds for retailers and wholesalers.
Stores such as Bazar Chino, China Mall, La Estrella, Nicaragua Electrónica, Mundo Nica, and Supermercado Chino, are among the best known in Managua.
“Beyond its interests in critical areas such as strategic infrastructure, investments in sensitive technologies, chain and logistics point control, China also pushes products such as textiles, telephony, household appliances, and food at low cost, harming the local market,” Calle said.
Casa China, the first Chinese supermarket in Managua, opened its doors in August 2023, Salvadoran news site El Economista reported. According to Confidencial, imports of Chinese mass consumer products have grown by 114 percent in Nicaragua in the last four years.
China’s pressure
In June German news network DW reported that the import of Chinese products not only affects Nicaragua, but also other countries such as Brazil, where there is unease in the textile sector toward suppliers of the Beijing regime.
The concern stems from the production conditions of Chinese corporations such as Shein, which are different from those of small Brazilian companies and are already driving thousands of local businesses out of the market. At the grassroots level, there is a growing impression that China’s strategy is destroying local business structures rather than allowing them to benefit.
“Lately, the challenges and risks associated with China’s rise as a dominant player in many economic and technological areas have become increasingly clear in Latin America,” Christian Hauser of the University of Applied Sciences in Graubünden, Switzerland, told DW.
“China has for several years now been interfering politically and economically in Latin America with its financial and commercial power. It desperately needs long-term supplies of food, fish, and minerals such as copper, iron, and lithium. In the Southern Cone we are all major producers of these goods,” added Calle.
In early June, China banned the import of Guatemalan coffee and other goods. While there was no official explanation, Guatemalan President Bernardo Arévalo presumed that it had to do with his country’s ties with Taiwan, DW reported.
Businessmen in the Dominican Republic are also suffering the consequences of China’s penetration, reported Dominican newspaper El Día, citing the proliferation of large Chinese commercial establishments with a growing product portfolio, especially in items such as construction tools, clothing, and household goods.
In mid-April, Infobae reported that a delegation of the Chinese Communist Party visited Nicaragua to meet with representatives of the Ortega-Murillo regime to strengthen ties of friendship and economic cooperation.
Since the Nicaraguan dictatorship resumed diplomatic relations with China, it announced more than a dozen projects that could drown the Central American country in millions of dollars in debt, independent Nicaraguan news site Despacho 505 reported.
According to Central Bank data, Nicaragua has accumulated a foreign debt of $15 billion, equivalent to 97.3 percent of its gross domestic product. If China’s proposed projects are carried out, the debt would increase significantly and could turn the country into “a Chinese colony,” Nicaraguan economist and political analyst José Dávila Membreño told Despacho 505.
“All these problems and the influence of China are detrimental to small traders in Nicaragua and other nations in the hemisphere. Local competition is unequal, unfair, and unpatriotic,” Calle concluded. “Chinese companies have enormous benefits by signing agreements with nations such as Nicaragua, which free the Asian country’s companies from paying taxes. This type of action has occurred in recent years in several Latin American countries.”
