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China plans controversial trade center in Cancun

March 12, 2013

Cancun

Plans to build a massive complex for the sale of Chinese merchandise in Cancun have triggered an outcry from Mexican industrialists and environmentalists.

If it goes ahead as planned at an initial cost of 180 million dollars, Dragon Mart Cancun will stock furniture, jewelry, electronics, toys, construction materials and other goods, targeting wholesalers in the growing markets across Latin America and the Caribbean. With 722 homes for the Chinese administrators of its 3,040 showrooms, it would be the largest trading center for Chinese products in the western hemisphere.

Modeled on the hugely successful Dragon Mart Dubai that opened in 2004, the project is expected to generate 8,550 direct and indirect jobs. Promoters say it will spur greater trade between China and the Americas, as well as promoting cross-cultural ties, with the village hosting events to showcase Chinese music, dance and culture. They also say it will broaden regional tourism, drawing an additional one million people a year to Cancun, which is already the most popular beach resort in the Americas.

Despite these apparent benefits, many Mexicans are firmly opposed to the project. Over 100 environmentalists staged a protest last month, arguing that the project, which will be based about four miles from Cancun’s airport and just over two miles from the protected Puerto Morelos coral reef, violates environmental regulations.

Meanwhile, many Mexican businesses are worried about the economic impact of increased competition from inexpensive Chinese imports.

Since signing the North American Free Trade Agreement (NAFTA) with the United States and Canada in 1994, Mexico has modeled itself as a low-cost manufacturer. This left the economy vulnerable to China’s robust manufacturing supply chain, with Mexico losing hundreds of thousands of jobs when factories began relocating to China after it joined the World Trade Organization (WTO) in 2001.

Bilateral trade remains heavily skewed in China’s favor, with Mexico importing about 90 percent of the 60 billion dollars worth of goods that flow between the two countries each year, according to Mexican government data. This trade deficit and the competition over cheap labor have ensured that relations between the two countries remain tense, with the Mexican government filing four complaints against China with the WTO in recent years.

In a bid to allay the fears of Mexican businesses, those behind the project made the concession that no shoes or clothing will be sold at Dragon Mart Cancun so as not to damage these major Mexican industries.

Dragon Mart Cancun is a joint venture between Mexican investors and Chinamex, an overseas promotional department of China’s Ministry of Commerce. Chinamex chairmen Hao Feng owns 10 percent of the shares of Dragon Mart Cancun Real Estate, 45 percent is owned by Yucatan businessman Carlos Castillo Medrano, who owns the 571 acres of land, locally known as “El Tucan,” where the complex will be built, and the other 45 percent is owned by a group of investors from Monterrey.

The aim of Dragon Mart Cancun is for China to diversify its exports, which are still heavily dependent on the shaky economies of the United States, Europe and Japan. The developers considered other host cities such as Los Angeles, Miami, Panama City, Sao Paulo and Tijuana, but chose Cancun because of its major international airport, its world-class hotels, restaurants and tourist attractions, and the promise of tax breaks from the Quintana Roo government.

The project has already received the green light from the state government and construction is now set to begin after the Benito Juarez municipality finally signed a building permit in late February. The project is due for completion in May 2014.

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2 Comments leave one →
  1. Veronica permalink
    March 15, 2013 07:31

    The development of this Chinese project can be opposed by many people. But it will surely increase the sales of Chinese products. Building of this mart can increase the land prices in nearby areas which will benefit Cancun real estate professionals.

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  1. MexicoDailyReview Dragon Mart in Cancun suspected by environmental authorities - MexicoDailyReview

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