Chinese Knockoff Sombrero Drags Colombian Tribe Into Trade Fight

In the Caribbean village of Tuchin, Colombian families who’ve woven straw hats for generations are seeing their livelihoods threatened by competition that shows China’s double-edged impact in Latin America.

Chinese-made imitations of the black-and-white sombrero vueltiao, as the hat is known, sell for half the $20 price of the least expensive originals. In response to plunging sales by artisans who spend up to 15 days cutting, sun-drying and braiding cane leaves to make a single hat, the government is rushing to protect one of the nation’s symbols and ban plastic, machine-made rip-offs.

“The Chinese are stealing our culture like the Spaniards did 500 years ago,” said Eligio Pestana, mayor of Tuchin, where 90 percent of the 34,000 residents, descendants of Zenu Indians, depend on the handicraft trade.

An anti-China backlash is on the rise throughout South America as businesses, from automakers in Brazil to shoemakers in Argentina, demand protection from foreign competition. The trade tension highlights the downside of the continent’s increasing economic ties with the world’s most populous nation, fueled by China’s appetite for commodities from copper to soybeans.

 

“There’s high sensitivity to China throughout the region,” Colombian Finance Minister Mauricio Cardenas said in a Jan. 15 interview in Bogota. “While we’re all happy with one side of the story, enjoying the high price for our commodity exports, the economic impact on the currency and manufacturers can be very negative.”

 

Resource Exports

China’s global hunt for natural resources has expanded Latin America’s annual exports to the Asian nation more than 20- fold, to $86 billion in 2011 from $3.9 billion in 2000, according to calculations by the Inter-American Development Bank.

The gains have come at a cost to South American industries. Dollar inflows generated by the export boom have driven the region’s currencies higher, making imports cheaper and leaving local manufacturers hard-pressed to compete.

 

Brazil’s real, Colombia’s peso and Chile’s peso were the three best-performing emerging-market currencies over the past decade, each surging more than 55 percent on demand for the countries’ iron ore, oil and copper. They’ve continued to climb the past two months, as the U.S. Congress averted a fiscal crisis and China’s economy rebounds, renewing calls among policy makers for action to curb dollar inflows.

 

|Bloomberg|