Chinese start-ups export playbook to Latin America for new riches

Two years ago, Tang Xin had never set foot in Mexico and didn’t know a word of Spanish. While his grasp of the language hasn’t improved much since then, he has built one of the country’s hottest apps.

Noticias Aguila, which translates as News Eagle, now has 20 million users and became the No 1 news app in Google Play’s Mexico store late last year, according to App Annie. That has come as Tang and his development team remain based in Shenzhen, the Chinese technology hub just across the border from Hong Kong.

Tang, who worked for Tencent Holdings before striking out on his own, is among an emerging group of Chinese developers and investors betting the next technology gold rush will come from Latin America and its 600 million-plus people. Fueled by deep-pocketed mainland venture capitalists and success at home, the 40-year-old and his peers are exporting a formula honed in China of pursuing rapid expansion over profitability.

Chinese venture capital investment in Latin America jumped to US$1 billion since the start of 2017, compared with about US$30 million in 2015, according to data collected by Preqin.

“China used to copy from overseas, but now we see more opportunities by helping replicate business models that have taken off and exporting them,” said Tang, who now spends a quarter of his time in Mexico. “Competition is so fierce in China that smaller companies feel it makes sense to look for opportunities elsewhere.”

Chinese start-ups pushing into the region include Hangzhou-based Tian Ge Interactive Holdings, which wants to build an internet finance platform in Mexico. Phone maker Transsion Holdings is preparing to set up operations in Colombia while China Mobile Games & Entertainment Group plans to distribute mobile games in Mexico. Ofo, the Beijing-based bicycle sharing service, is preparing to make its first Latin America foray by entering Mexico, said Chris Taylor, who runs its US operations.