TAIPEI (Taiwan News) — Honduran businesses are reportedly suffering a 70% drop in sales after the market became inundated with Chinese products following the country's switch of diplomatic ties from Taiwan to China.
In Tegucigalpa, the capital of Honduras, 14 large Chinese low-cost stores have sprung up, according to a report by Honduran newspaper El Heraldo. This has led to local businesses struggling to survive under the pressure of cheap, mass-produced products.
According to city official Marco Mendez, aside from the 14 large Chinese stores in the city center, there are many more Chinese establishments throughout the city. Local merchants told the newspaper that the influx of Chinese products has caused their sales to plummet by 70%.
Local business owners have also raised concerns about the questionable quality of Chinese goods. Despite this, low prices and the open sale of "trinkets that everyone knows are imitations,” have attracted many Hondurans, said Carlos Cerna former president of Mercado Zonal Belen, per El Heraldo.
This has further exacerbated unequal competition, forcing numerous local businesses to shut down. Yet, local authorities have not taken a position on how to mitigate the impact.
Honduran Congresswoman Maribel Espinoza told El Heraldo the rise of Chinese stores, “have already bankrupted small and medium-sized industries.” She said the unfair competition has impacted traditional Honduran crafts.
“With these massive Chinese imports, they are driving our artisans and shoemakers out of the market,” commented Espinoza.
Honduras initially hoped that severing ties with Taiwan in favor of China and signing a Free Trade Agreement, would open new business opportunities, per CNA. However, progress on the FTA has been repeatedly delayed by China.
Honduras seeks to export over 20 agricultural and seafood products, including shrimp, coffee, and sugar. However, China's export list includes agricultural goods, electronics, and chemical equipment.
China has also demanded access to investments in energy and mining sectors, as well as openings in services such as finance, telecommunications, tourism, and education.
Honduras' Ministry of Economic Development has voiced frustration. China exports over US$2 billion (NT$65 billion) worth of goods to Honduras annually, while Honduras exports only around US$40 million worth of agricultural products, such as coffee, to China.
According to CNA, this trade imbalance has made Honduras one of the countries with the largest trade deficits with China.