Q: Why is New Tigers Consulting interested in participating in Mexican projects?

WQ: Companies that are interested in investing or offering EPC services are traditionally working outside of China. The companies we have been contacting have been working in Australia, South America and in Africa, including the DRC, Mozambique and Madagascar. For the Sonoro Metals project, a Mexican experience was desired. There is gold here, so NTC wanted to get involved in the business, resulting in our partnership with Sonoro Metals.

Some of the Chinese EPC’s also produce mining equipment, exporting it along with their expertise. That is the plan. A successful entry into Mexico would also open the door to other Chinese companies, providing an opportunity to export to this part of the world. Success here will make these Chinese equipment manufacturers more competitive against the bigger American players, such as Caterpillar and John Deere.

Q: What challenges do Chinese companies face in the Mexican industry?

WQ: The main challenge is communication. Although some team members speak English and Spanish, the cultural background is different. This is the major issue. Otherwise, Chinese products and equipment are competitive in terms of quality and price, sometimes offering half the price of major companies. The perception of Chinese quality has changed for the better over the years. Apple products, for instance, are all made in China, as are 70 percent of notebooks. Home appliances, such as washing machines and dish washers, are manufactured in China too. Some companies might still have a negative perception of the quality, but it has improved to the point where many companies have all their state-of-the-art technology originating from China.

Another issue concerns local laws. These are often complicated, so less scrupulous Chinese companies could try to take shortcuts and sometimes end up not complying.

JD: We have few communication issues. Dr. Wei is a knowledgeable person, well-acquainted with Western culture. Through his company we can easily get in touch with all of China. That is a big help.

Q: What are the main questions potential Chinese investors ask before investing in a project like Sonoro Metals?

WQ: Investors often enquire about risks. They wish to have a very clear picture going forward regarding the culture. Ordinary Chinese people do not buy shares by themselves; they buy them through brokers.  These brokers are sometimes based in Hong Kong and Singapore. Corporate investors, however, can invest directly wherever they like. They have a different strategy, which sometimes includes diversification of their portfolios. The Chinese government sometimes adopts foreign investment policies, investing partly by themselves as well. In China, we have the Belt and Road initiative, focusing on global development. Once a project enters this program, it receives funds from the government. Many mining projects are now operational in Africa, which is widely supported by the initiative. Mexico will partially benefit from the program.

The relationship between Mexico and China presents opportunities.  China experiences few disputes internationally, but countries such as the US will raise issues every now and then. Mexico has never raised these kinds of issues and has a better perception of China. This contributes to China’s interest here, such as potentially funding a railway system.

Q: If a deal with Sonoro Metals and a Chinese counterpart materializes, what would you recommend to the teams to make the partnership work?

WQ: The Chinese company should go and see the site first. The state of Sonora is safer and more accessible than some people think. The first phase is often the most complicated, due to parties not fully trusting each other. Once they build that confidence, the second phase that requires the commitment of equipment, manpower and investment becomes a no-brainer. This is a pilot project for now, but it will continue to become a full project.

Q: If you are successful in attracting more Chinese investment during the coming rounds, how would you spend it?

JD: Our goal would be to build a bigger mine. We are happy to work with Dr. Wei. We believe that Mexico needs economic development. It is traditionally a mining country anyway. Financing a project of this size is not easy, so working with people from China who have the means is a privilege. If we can build up our project, it will be good news for us, and for Mexico. Our main goal is the bigger picture, not just the pilot project.

In terms of what we would like to know about Chinese companies before we partner with them, we were curious how much Chinese companies know about mining. It is not an easy industry, and is different from China’s tradition in manufacturing.  But China has made many technological advances. I learned via Dr. Wei that China has focused some of these advances on mining, gaining experience worldwide. We feel secure in knowing they have a strong expertise as well.

Q: What is the worst-case scenario related to COVID-19 and its impact on the development of projects like this?

WQ: Delays are bad for business, which is what the virus has caused.  Everything had stopped and it will be bad if it stops again.  Everyone knows this and the government is working to make sure this does not happen. We need to be ready to accelerate the process including site visits as soon as the government says it is a good time to do it. The key is to maintain open communications and to continue talking to business partners. China is strongly centralized. What is often managed by companies, NGOs or another organization in the West, is all centralized in China. NTC also offers expertise in government relationships. The government has a clean record in terms of corruption, but it can be hard to approach the Chinese government if you do not know how to deal with issues. The government has been encouraging investments in mining projects and two of our most enthusiastic partners are giant state-sponsored EPC companies. They do not do anything that does not fit within government policy – so our timing is actually quite good.

New Tigers Consulting Limited is a professional services firm providing China entry to foreign-capitalized companies. Its services include company and office management, tax reports, accounting, market research and management advisory