Latin America and China: Opportunities and new demands for contracts, procurement and commercial management

1. A relationship that is no longer just commercial

For the past three decades, the relationship between Latin America and China was described mainly in terms of Latin America, on one hand, exporting natural resources, food, and raw materials, and China, on the other, exporting manufactured goods, technology, machinery, and industrial products. Although that reading of the landscape is still relevant, it is no longer sufficient, since the relationship has entered a more complex stage. China no longer appears only as a buyer of commodities or a supplier of competitive goods; it also participates as an investor, financier, contractor, operator, technology partner, and key player in strategic supply chains.

This shift is not without consequences, and it has direct implications for Latin American organizations. It is no longer simply a matter of buying or selling better, but of managing long-term commercial relationships, involving multiple actors, different regulatory frameworks, cultural differences, and execution risks. As a result, the fundamental challenge lies not only in the scale of bilateral trade growth with China (which has multiplied more than 40-fold since the year 2000)[1], but in whether Latin America is building the conditions and capabilities needed to manage it properly. In this new landscape, contracts, procurement, and commercial management leave behind their purely administrative or operational role to become key strategic instruments.

2. Where the change is already happening

This shift is already being seen intensely in sectors that are strategic for Latin America: infrastructure, mining, energy, logistics, technology, telecommunications, electromobility, and supply chains linked to the energy transition. Although these may seem like very different sectors, they all share something in common: they require long-term contracts, high levels of investment, multiple actors, strong technical coordination, and careful risk allocation.

In this context, Chinese companies can take part in various forms: as equipment suppliers, EPC contractors, investors, operators, financiers, technology partners, or long-term commercial counterparties. Each of these roles generates different contractual risks and needs.

Recent examples show the diversity of this presence. The port of Chancay in Peru reflects the logistics and port dimension of the relationship; San Juan de Marcona shows the connection between port infrastructure and mining activity; and projects such as Line 1 of the Bogotá Metro demonstrate that Chinese participation also extends to complex urban works, systems, operation, and maintenance. In all these cases, the contractual challenge goes beyond building or supplying; it also involves coordinating financing, permits, technology, interfaces, guarantees, operations, and long-term relationships.

What matters most, beyond identifying growing sectors, is understanding what kind of contractual commitments are emerging within them. The more strategic the industry, the greater the need for clear contracts, sophisticated procurement, governance mechanisms, early risk management, and professional capabilities, able to support the project throughout its entire life cycle.

3. Negotiation doesn't change only because of language, it changes because of approach

One of the first challenges in these relationships is understanding that the difference does not lie solely in language. It is not advisable to generalize. China is not a homogeneous bloc, and neither is Latin America. Negotiating with a Chinese state-owned company is not the same as negotiating with a private technology firm, a bank, an EPC contractor, or an industrial supplier. Nor is it the same to do so from Chile, Peru, Mexico, or Colombia.

In practice, however, relevant differences tend to appear and must be managed. Many Chinese organizations may have a more hierarchical decision-making structure, with internal approvals that are not always visible to the Latin American counterparty. There may also be a more gradual view of trust and greater importance placed on the long-term relationship. In Latin America, negotiations may combine personal closeness, flexibility, commercial urgency, and, in complex projects, a strong tendency to document positions once risks or disputes emerge.

These differences can turn into disputes when they are not made explicit or built early into the contractual structure and project governance. One party may interpret flexibility as a lack of rigor, formality as distrust, or commercial speed as unacceptable pressure. For this reason, in cross-cultural relationships it is essential to agree on how decisions will be made, who will hold authority, how agreements will be documented, how problems will be escalated, and how the relationship will be preserved without losing contractual clarity.

4. The contract as a governance tool for the relationship

It is often thought that problems stem from the complexity of the contract. In practice, however, a significant part of disputes does not arise only from the contractual text, but from how that contract is managed during execution.

In long-term commercial relationships, especially those involving international actors, multiple jurisdictions, and cultural differences, the contract must function as a governance tool. That is, it must set out how the parties coordinate, make decisions, document instructions, manage changes, escalate disagreements, and preserve value throughout the project's life cycle.

When that governance is missing, the contract can become a defensive instrument, used only once a problem has already escalated. When it is well designed and well managed, on the other hand, it allows risks to be anticipated, ambiguities to be reduced, and complex commercial relationships to be sustained without relying solely on the goodwill of the parties.

For this to work, it is not enough to have a sophisticated contract, drafted after long working sessions between legal teams and the various project areas, that appears to be well designed. That contract must be explained, transferred, and turned into a management tool for the professionals who will carry out its execution. This is key, because in Latin America the contract is often kept aside until a problem arises. This happens largely because project teams have not always been trained to understand, apply, and manage it during execution.

In that sense, the real challenge with China is not choosing between the contract and the relationship. The challenge is designing contracts capable of properly governing the relationship.

5. Recurring mistakes that erode value

In complex commercial relationships, the most costly mistakes rarely appear right away. They often originate at the negotiation or contracting stage, but surface months or years later, during execution, when the project faces changes, delays, technical problems, regulatory constraints, or differences in interpretation between the parties.

One of the most frequent mistakes is defining the scope insufficiently. In projects with significant technical components, a general description of the works, supply, or service can be inadequate unless it is accompanied by clear specifications, applicable standards, acceptance criteria, performance tests, and rules on what happens when adjustments are required.

Another common mistake is treating language as a secondary issue. In relationships between Chinese and Latin American companies, the contract language, the hierarchy among documents, the validity of translations, technical manuals, formal communications, and the language of any eventual arbitration can all have significant consequences. A poor translation or an inconsistency between versions can turn into a dispute.

There also tend to be weaknesses in risk allocation. Permits, customs, international logistics, regulatory changes, exchange rate variations, spare parts availability, after-sales support, technical warranties, environmental compliance, and labor obligations must be expressly regulated. When these risks are left open, each party tends to interpret them in the way most favorable to its own position.

Another mistake is underestimating change and claims management. In long-term projects, changes are not an exception; they are an expected part of execution. For this reason, contracts must set out clear procedures for notification, analysis, valuation, approval, and record-keeping. Without these steps, differences accumulate until they become larger-scale disputes.

It also happens that many organizations design dispute resolution mechanisms that are correct on paper but of little practical use. In strategic projects, it is worth including early escalation stages, technical committees, executive committees, mediation, dispute boards, or other mechanisms that allow problems to be resolved quickly.

In critical infrastructure, these risks can persist even after commissioning. Some hydroelectric, port, or transportation projects in the region show that the handover of the works, warranties, defects, operation, maintenance, and dispute resolution can become long-term issues.

Regional cases such as the Kirchner–Cepernic dams in Argentina show that execution risks in projects with Chinese participation are not only technical. They can also be environmental, judicial, political, financial, and related to continuity. For this reason, contract management must anticipate not only construction, but also permits, governance, financing, regulatory changes, and long-term sustainability.

These mistakes erode value: they raise costs, delay decisions, weaken trust, affect operational continuity, and reduce the ability of Latin American organizations to fully capture the opportunities of a more sophisticated commercial relationship.

6. The great opportunity: capturing value, not just trading more

The growing relationship between Latin America and China also represents a significant opportunity for the region. China offers scale, industrial capacity, technology, financing, infrastructure experience, demand for strategic resources, and participation in global chains linked to energy, mining, logistics, food, electromobility, and the energy transition.

However, the real opportunity for Latin America lies not simply in selling more, importing more, or attracting more projects. It lies in capturing more value within those relationships. That requires moving from a purely transactional logic to a more strategic one, in which Latin American organizations negotiate better, structure their contracts better, managetheir risks better, and develop internal capabilities to sustain long-term commercial relationships.

The opportunity is not simply to increase trade volume or attract more projects, but for Latin America to negotiate better the terms under which it takes part in that relationship. If contracts only regulate price, deadlines, and delivery, the region risks capturing little value. If, instead, they include clear rules on performance, warranties, support, capability transfer, operation, maintenance, and early problem-solving, they can become instruments for building more balanced and sustainable commercial relationships. To achieve this, contracts and procurement play a central role. A good contract not only protects against breaches; it can also create the conditions for collaboration, innovation, and capability transfer.

The relationship between Latin America and China can open a new stage of opportunities, one that will depend on the ability of Latin American organizations to negotiate with greater sophistication, manage execution better, and turn complex commercial relationships into sustainable value.

7. The capabilities that will define the next five years

Over the next five years, the relationship between Latin America and China will likely become more intense, but also more demanding and more sophisticated. Latin American organizations will need to develop more comprehensive capabilities. Advanced contract management will be one of them: not only for drafting or reviewing contracts, but for actively managing them throughout their execution.

Alongside this comes the need to strengthen cross-cultural negotiation. Working with Chinese counterparts requires understanding differences in decision-making timelines, hierarchies, trust-building, handling disagreement, and expectations about the contractual relationship. This is not about assuming stereotypes, but about recognizing that complex international relationships require greater preparation, listening, and adaptability.

Risk management will also continue to be relevant: regulatory, environmental, social, financial, technological, geopolitical, and execution-related risks. In infrastructure, energy, or technology projects, the contract professional cannot work in isolation from the business or the technical team. They must understand how a commercial decision affects the contract, how a technical condition affects risk, and how a coordination failure can turn into a conflict.

Companies will need to train their teams, involve them early in the contractual logic of the project, and teach them to use the contract as a management tool, not as a document reserved for disputes. All of this without losing sight of the ultimate goal: executing projects, creating value, and sustaining long-term commercial relationships.

Building on this, and in line with the findings of the World Commerce & Contracting (WorldCC) and the Commerce & Contract Management Institute (CCMI) on negotiation, information asymmetries, and contract governance, Latin American organizations seeking to engage more effectively with Chinese counterparties should strengthen four practices:

First, entering negotiations with greater parity of information, through independent technical, financial, legal, and commercial analysis. Second, gaining a more precise understanding of the counterpart's actual decision-making structure, especially when state-owned companies, foreign parent companies, or associated financing are involved. Third, treating the contract as a genuine governance framework for the relationship, rather than merely a record of what was agreed at signing. And fourth, using the commercial relationship strategically: not as a substitute for clear rules, but as a channel that complements the contract and allows changes, difficulties, and important decisions to be addressed during execution.

For this reason, the profile that will make the difference will be a hybrid one. There will be a need for professionals capable of reading contracts, understanding business models, engaging with engineering teams, anticipating risks, negotiating with commercial judgment, documenting properly, managing claims, and sustaining long-term relationships without losing clarity or control

The relationship between Latin America and China will continue to offer significant opportunities. The ability to seize them will depend on the maturity with which organizations negotiate, contract, and execute. In this new stage, it will not be enough to manage documents or processes. What will be needed are people capable of connecting strategy, relationship, risk, and execution.