7 de mayo 2024
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Dozens of local businesses in the departments of Nicaragua have seen sales drop by up to 70% following the opening of Chinese stores that are spreading throughout the country. Entrepreneurs and business owners claim they don’t have the “capacity to compete with the Asians,” who offer retail goods at the wholesale prices the merchants previously found in Managua.
For two years, Marcos has sold electronic accessories in Matagalpa, in northern Nicaragua. But at the beginning of 2024, the first Chinese store opened near his business, offering similar or identical products at lower prices. Since that time, his sales have decreased by 80%.
“My main category was cell phone accessories, but I stopped selling them because they were just sitting on the shelves. The Chinese sell chargers or headphones at 10 or 15 cordobas each [US 28-46 cents] while I sell them at 40 or 50 [US $1.10 – $1.36], so people prefer to buy from them,” he explains.
In some cases, the price of products at the Chinese retail stores was the same as he paid wholesale in Managua as a supplier. The merchant also feels the impact of this new competition on his business alliances, as he used to place items in stores in other departments. However, those businesses have been equally affected. “That all collapsed. The last order I sent outside of Matagalpa was in January,” he recalls.
To Marcos, the arrival of Chinese businesses in the departments of Nicaragua is a “slap in the face” for local businesses. “We don’t have the capacity to compete with the Chinese. I’m not going to deny that it’s affecting us a lot,” he laments.
Chinese businesses expand into Nicaragua’s western departments
In Chinandega, in western Nicaragua, Leticia began selling cosmetics, beauty products, personal care items, and costume jewelry in her home a year ago. But in March 2024, a large Casa Mundo store – a branch of Tienda 3B located in Managua – opened near Chinandega’s Central Park.
Leticia is upset at the lack of customers in her business after the opening of the Chinese store.
“This is going to break most small merchants and businesses here in Chinandega. We thought those stores were going to be wholesale outlets, to help businesses save on shipping or travel costs from Managua,” she explains.
The Chinese store sells home appliances, furniture, home and office items, and fashion products including cosmetics and beauty items of the same brands that Leticia offers, sometimes at half the price.
A perfume she was selling for the equivalent of US $4 dollars is available at the Chinese store for around US $2.20, the same price she could get wholesale in Managua. Leticia claims that other merchants and entrepreneurs are going through the same situation. Even if they wanted to lower their prices, it’s “impossible,” because they must account for transportation, operational costs, and still make some profit.
“The Chinese offer better prices because they import their products directly from their country, and their suppliers must give them very low prices due to the large quantities. How can I compete with them, since I only order a few dozen of an item from a stall that resells in the Mercado Oriental in Managua?” she questions.
The expansion of the Chinese businesses
The expansion of Chinese businesses in Nicaragua began in Managua, with the establishment of stores in the Mercado Oriental, offering products of all kinds to both retailers and wholesalers. The inauguration of these new megastores continues at a record pace along the capital’s main avenues, shopping centers, and central areas.
Stores like Bazar Chino, China Mall, La Estrella, Nicaragua Electronica, Mundo Nica, and Supermercado Chino are among the best-known in Managua.
The “China MTMAX” brand and store, which began in the Mercado Oriental before 2024, used to be the main supplier for one of the merchants Confidencial spoke with. Now, this store has over ten branches in Leon, Masaya, Granada, and Matagalpa, offering cell phone accessories.
In Matagalpa, there are three other stores located at different points in the city center. The first and most well-known is China 365, which was established in the last months of 2023 in a three-story building located across from one of the city’s two main parks.
The megastores offer a similar range of products to the rest of the country. Beauty products, electronics, home appliances, clothing of all kinds, footwear, decorative items, and food products are their main categories.
China-Nicaragua free trade agreement – key to the invasion
The expansion of Chinese businesses in Nicaragua increased in the first three months of 2024, right after the Free Trade Agreement (FTA) between Nicaragua and the People’s Republic of China entered into effect on January 1, 2024. The FTA was negotiated and signed by Laureano Ortega Murillo and Wang Wentao, China’s Minister of Commerce, on August 30, 2023. Nicaragua’s National Assembly formally approved it on November 2023.
Chinese businesses make maximum use of TikTok, where they announce their upcoming openings – most currently in cities of the Carazo and Rivas departments, in the southeastern part of the country.
In March, two Chinese stores opened in Jinotega’s city center: Almacenes Luna and Estrella de Suerte. Other new Chinese stores have opened in Masaya – one in January and one in March. One of these Masaya stores offers the novel practice of selling all its products for 30 cordobas [US $0.82], including kitchen and home items, accessories for different ages, toys, makeup, and similar products. The other store offers handbags, household items, and home appliances at varied prices.
Confidencial confirmed the presence of Tienda China 1998 located on Granada’s main business street. The establishment, inaugurated in March, is a branch of the store with the same name located in Ciudad Jardín in the Mercado Oriental.
Chinese stores are also functioning in Leon, Boaco, Estelí, and Nueva Segovia, as well as in the North Caribbean city of Siuna, and Bluefields, the capital of the South Caribbean.
Chinese “are also the manufacturers”
Margarita has been selling small appliances and kitchenware in Masaya for over ten years; not too long ago, she expanded her business to include handbags, cosmetics, and personal care products as well.
So far, she says, she hasn’t been greatly affected by the competition from the city’s two new Chinese stores because she offers brands with more established reputations than the new Chinese products. She assures that her brands have better reception and offer more guarantees to consumers.
“I sell an Oster iron for US $16 – $19. The Chinese bring a Gippon iron for just over US $8.00. People know which one is better, although some prefer to pay less,” she compares.
However, she admits she’s felt the impact on the cosmetics and other personal products she introduced to diversify her business and income. The merchant can’t explain how the new Chinese stores can offer the same products at such low prices.
A few months ago, cosmetics were her most profitable item. Now, she stresses: “sales of these have dropped by nearly 70%, because these people sell individual products for the same price I pay wholesale for a dozen.”
Margarita believes Chinese businesses offer lower prices because the megastore owners “are also manufacturers.” As a Nicaraguan, she asserts, this “limits our ability to sell goods at competitive prices compared to them.”
Looking for other alternatives
Margarita states that most merchants in Masaya feel affected by the new competition. Some have tried to compensate by participating in the local market fairs organized by the mayor’s office or the local business associations, even though they previously preferred not to do so.
“They [the Chinese] open stores near the main market or central areas, even though there’s already a glut of small businesses there. It’s obvious that those who will do poorly are us [local Nicaraguan businesses] due to the prices they offer. That’s why we go wherever we’re invited to sell,” she says.
Gabriela, an entrepreneur from Jinotega, started a used clothing business at home in 2021. Over time, she expanded her home business to include makeup, accessories, and personal care items. Due to that offer, her business took off in the last two years.
She would buy in Managua and sell at good prices in Jinotega. But her sales declined due to the arrival of Almacenes Luna and Estrella de Suerte, the city’s new Chinese stores.
“Customers ask my prices, and when I tell them, they say it’s cheaper in the Chinese stores. My sales of makeup and accessories have plummeted – I’m selling next to nothing,” she recounts.
To face the competition, she’s now boosting the sale of used clothing, her original business, although it was the other items that had generated the highest profits for her in the last year.
“I couldn’t just watch my income decline, with a business where I maybe sold just one tube of foundation makeup all day. That’s why I went back to bringing in more second-hand clothing. Here, we have to find other things to sell, that the Chinese don’t bring,” Margarita concluded.
This article was published in Spanish in Confidencial and translated by Havana Times. To get the most relevant news from our English coverage delivered straight to your inbox, subscribe to The Dispatch.
