Photo credit: Chinese Dragon by Rool Paap
Enrique Peña Nieto has been in talks with his Chinese counterpart since the year started, a sign of both countries burying their retail-related hatchet and deciding to work together to boost their strong economies. This is one of the reasons Chinese-backed Dragon Mart chose the Caribbean resort city of Cancun as its new location. However, this has sent the Mexican retail market in a frenzy, which at first prevented the city government from providing building permits.
The Reaction of Mexican Retailers
The $180 million Dragon Mart project, which will produce an exhibition space, warehouses and 380 hectares of conservation lands, has been termed as a “permanent” trade show that is just two miles from the sea. This angered Mexican industrialists, since it meant that their domestic market would be flooded with inexpensive Chinese merchandise. The store’s location also ensures easy international trade, which will further reduce the U.S.A.’s recent dependency on Mexican goods due to lower customs and quick delivery.
To further guarantee that Dragon Mart doesn’t set roots, environmentalists were rallied after pollution threats and risks to the fragile land and seascapes were pointed out. Because of the large number of protests and complaints, the construction permits for Cancun’ s Dragon Mart were denied by the Democratic Revolution Party, rival of Institutional Revolutionary Party (PRI) of Peña Nieto.
How Cancun’s Dragon Mart Bounced Back
Juan Carlos Lopez, executive director of the Dragon Mart project in Cancun, vowed to never go without a fight. Come April, he and his team sued the city of Cancun to get rid of the political impasse that had the potential to cancel the project or delay it indefinitely. As a result, Peña Nieto’s party took action in July. It lobbied the municipality and state court to approve the project in August. The permitting process was concluded in mid September and the actual construction will begin in October and last for 16 months.
Is Cancun’s Dragon Mart a Bad Idea?
Many Mexican entrepreneurs are disgruntled with the government’s decision. However, there are a few things which may prove them wrong. First of all, the propaganda surrounding Cancun’s Dragon Mart caused them to fully believe that they won’t be benefiting from this project. Truth is Real Estate Dragon Mart is 45% owned by Carlos Castillo, 45% by Monterrey Cancun Mart, and 10% by Chinamex Middle Investment and Trade Promotion Center.
That aside, with the blessing of the PRI, Dragon Mart has put up a billboard advertising that it will provide 8500 jobs to the locals. This is because the project directors believe that Mexican labor is of “high quality and very reliable”. Therefore, unemployment will experience a significant drop.
However, the project keeps on undergoing facial changes. According to the last press release, it will be promoting products from Brazil, Canada, Venezuela, Korea, Japan, Vietnam and the Dominican Republic. This means that it will be more of an international trade project. Yet, because of the continuous changes that the project underwent, Mexican businesspeople have their reservations.
Regardless, the Cancun Dragon Mart is here to stay and it will be up and running by 2015. As Mexico wants to increase trade with China, an the negotiation of a free trade agreement is in process, this type of projects would become common in the Mexican business landscape.