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The presence of numerous Chinese stores and businesses in virtually every major shopping center and markets in Nicaragua is affecting local commerce in various ways—from those who have realized they have no option but to close, to those who have discovered a new opportunity to make money. Some have even decided to try importing on their own.
The reestablishment of diplomatic relations with the People’s Republic of China, followed by the signing of a free trade agreement between the two countries, acted like a starting gun, triggering an invasion of Chinese businesses into Nicaragua. The opening of the Sogo Supermarket in Managua only adds to the number of establishments competing directly with Nicaraguan merchants.
CONFIDENCIAL spoke with several of them, uncovering stories as dramatic as Laura’s. She and her husband operated a shop in the Oriental Market selling jewelry, flowers, and household items—everything imported from China. As importers, they understood how international trade works, but the arrival of Chinese competitors shrank their profits to the point that they decided to close.
Like many merchants affected by the influx of Chinese businesses, Laura suspects that their new competitors benefit from a special fixed-tax regime granted by the government, which gives their businesses a significant boost. She claims these establishments do not issue formal receipts, which they are required to do—even under a fixed-tax scheme, they must generate receipts with official fiscal identifiers.
After struggling for a long time to avoid reaching the point of no return, Laura and her husband decided to bow out. They are liquidating their remaining inventory and don’t yet know what the future holds—though leaving the country is not off the table.
Hilario also works at the Oriental, selling balloons, decorations, and toys for parties and piñatas. His problem (like many others) is that the Chinese import shops also sell the same products, and he can’t compete on price. Gone are the days when he looked forward to holidays like Mother’s Day, Father’s Day, or Easter for a sales boost.
After days of barely selling anything, he began offering natural juices, soft drinks, and cold bottled water—anything to make money and cover household expenses. He hopes the Chinese retailers won’t be interested in offering the same service, which would at least give him a niche to survive.
Trying to Compete with Chinese Businesses
In response to the aggressive tactics of their Chinese counterparts, some merchants are fighting back with determination. If the Chinese can flood the local market with cheap products, why can’t Nicaraguans try importing directly and compete?
That’s exactly what Adrián thought. He owns a motorcycle parts shop that Chinese vendors have also targeted. Until recently, he stocked his store by purchasing from traditional Chinese product distributors, who only sold to wholesalers buying at least 50,000 córdobas in parts—protecting the traditional supply chain.
But the newcomers are selling directly to the general public—even to small-scale retailers who buy just 15,000 córdobas in goods. As a result, Adrián’s sales and profits dropped. After much deliberation, he approached a distributor with his own customs agent to propose a partnership.
After lengthy talks, they agreed to buy merchandise together from distributors in Panama to try to compete with the Chinese on price. If that goes well, they plan to begin importing directly from China.
José doesn’t work in the Oriental Market. In fact, his shop isn’t even in the capital city — but he knows exactly what many vendors in the Oriental are going through, because the ripple effects of those changes are reaching all the way to his small stand in a municipality outside Managua.
He has the advantage that his line of business — selling metal construction supplies — is, for now, off the radar of Asian importers. He hopes it stays that way, especially after a Chinese hardware store tried importing the same type of metal supplies he sells. The quality was so poor that the materials couldn’t withstand the demanding conditions required to ensure safe construction. They simply broke.
“That worked in my favor,” he recalled with satisfaction. “People would bring in the damaged Chinese product, and I’d say, ‘Ah! You bought from the Chinese too,’ and they’d end up buying from me. They tried to enter that market but it didn’t work,” the small business owner recalled with satisfaction.
Byron Came Out Ahead
Byron is among the small group of those (for now) who are still winning. He’s a survivor who has seen many others doing what he does give up in the face of unfair competition from the newcomers. “Something we used to buy for 40 or 50 córdobas at the market, they’re now offering three or four units for the same price,” he said. As a result, many vendors suffered huge losses and left commerce altogether.
He reflects that “before in a place like the Oriental, you might have three stalls in a row selling tomatoes, and they all sell—but not anymore. The arrival of these Chinese vendors has reduced sales so much that many small stall owners barely sell anything in a day, impacting their livelihoods.”
He notes that larger stall owners have an advantage because they often have a loyal customer base, so they’re less affected. The real blow falls on the small merchants—like him.
His former competitors sold plates, cups, glasses, and decorative items, but he prefers to focus on tech gadgets—headphones, chargers, projectors, game controllers, security cameras, and more. He finds clients both in person and online, advertising on social media and Facebook Marketplace, or simply promoting door-to-door—anything to make a sale.
From his perspective, the Chinese presence has actually helped his business, because it improved his profit margins. He recalls that when he used to buy an item for 100 córdobas at the market, the most he could sell it for was 150. “Now I can get an item for 50 and still sell it for 150, increasing my profits.”
He admits, though, that “the only questionable part is the quality—but people know that if they’re buying something cheap, they can’t expect top quality.”
Nothing Like Being Independent
José says that even if he had the resources and the right business scale, he wouldn’t try importing directly from China. “Right now, it’s not a good idea—you won’t get the same prices they get, nor can you bring in enough volume to make freight costs competitive.”
He also suspects that once the goods arrive in Nicaragua, Customs would slap them with inflated value assessments—like it does with many importers who aren’t part of the ruling clique.
“I know there are options like Importaciones Payita, but I wouldn’t consider working with them—and I don’t know anyone who has. Once, I was offered to bring in goods through a parcel service that people say is tied to the people in charge here [referring to presidential couple Daniel Ortega and Rosario Murillo], but I refused,” he said.
Adrián and his new business partner are aware of those risks too, but they hope they’ll be spared. Their first shipment is set to arrive next month. They’re optimistic that everything will go smoothly since their customs agent has managed the process closely and has reported no issues so far.
Even if everything goes well, they know it won’t be enough to compete with the Oriental importers, who benefit from the courtesy of not having to pay customs taxes—a privilege that allows them to sell even cheaper. That, if the suspicion held by many shop owners in the Oriental Market is true, who say the Chinese are playing with loaded dice.
