INSIGHT-Chinese firms do brisk business in Venezuela despite idle factories
By Brian Ellsworth and Corina Pons
SAN FRANCISCO DE YARE, Venezuela, June 23 (Reuters) - Five years after Chinese home appliance maker Haier agreed to build a $912 million factory in Venezuela, its washing machines and refrigerators are almost the only ones available in the country's department stores.
Those appliances, however, are not made in Venezuela.
They are instead imported from Haier factories in China and paid for through an oil-for-loans deal dating from 2007 under which China lends cash and is repaid in crude and fuel.
The cost of leaving Haier's facility idle is primarily borne by Venezuela's socialist government, because its construction was bankrolled with $800 million borrowed from China.
While most foreign firms are being battered by Venezuela's currency controls and product shortages, Chinese companies like Haier are doing brisk business thanks to cooperation deals that give them privileged access to the OPEC nation's economy but leave business risks in the government's hands.
The Chinese loans - some $50 billion since 2007 - have shored up Venezuelan finances at a time when low oil prices have prompted default concerns and effectively shut the country out of global capital markets.
But Venezuela is struggling to make good on promises that Chinese financing would spur new industries and reduce its century-old dependence on the oil industry.
China, on the other hand, has won a steady supply of oil for its economy and lucrative contracts for its companies to export goods to Venezuela, sometimes in the shadow of China-backed factories meant to produce those very goods locally, a Reuters review of dozens of official Venezuelan documents found. Continuación...