ChinaAMC Brazil trip boost investors' confidence on China sustainability

BEIJING, Nov. 18, 2025 /PRNewswire/ -- China Asset Management Co.(ChinaAMC) paid a visit to Brazil earlier this month. As the host of the 30th UN Climate Change Conference (COP30), this year's BRICS chair, a Global South nation proactively advancing green transition, and home to the world's largest tropical rainforest, Brazil is undoubtedly at the forefront of global climate efforts.

The trip included conferences organized by international organizations and investor initiatives, and field research and dialogues with Chinese companies operating there. Multiple themes were covered including deforestation and biodiversity, low-carbon technology application, sustainable supply chains, and Chinese enterprises' "go global" drive. From a sustainable policy perspective, ChinaAMC's ESG team identified the following trends:

1. Continuous improvement in carbon pricing mechanisms across developing countries；
2. Growing alignment and mutual recognition of sustainable finance taxonomies；
3. Rising focus on biodiversity and zero-deforestation initiatives；
4. Enhanced policy support for green investment in emerging economies, as well as international coordination.

International Conferences: From Consensus to Implementation
Through participation in events organized by Principles for Responsible Investment (PRI) and FAIRR Initiative, ChinaAMC's ESG team observed that while consensus has largely been reached, the central challenge lies in implementation. Dialogue and knowledge sharing among various stakeholders, governments, companies, and investors, help strengthen alignment, but what is truly needed is connecting government policies' potential support with the intrinsic supply chain demands and targeted companies, while fostering long-term value orientation among investors.

One key focus among participating institutions was the just transition in the agri-food sector. South American asset managers have already taken steps to finance the cause—for instance, through sustainability-linked bonds and green loans that incentivize farmers to adopt environmentally sound practices with long-term benefits. Asset managers from developed markets such as Europe, on the other hand, are proposing enhanced sustainability disclosure frameworks, based on local government policies and stakeholder demand; They are also assessing consumer acceptance of sustainability premiums, and encouraging leading companies to strengthen practices such as water management in response to the updates of regulations like the EUDR.

Xinran(Shirley) Xu, Head of ESG Research at ChinaAMC, was invited as a representative of Chinese investors to speak at two forums on agri transition, sharing Chinese investors' practices and vision. As a pioneer in ESG integration in China's asset management industry, ChinaAMC has not only focused on decarbonization in high-emission sectors like power and heavy industry, but also on innovation and sustainable development in agriculture—particularly key areas such as methane reduction. ChinaAMC cares if a company's sustainable measures align with its business interests. Therefore, when assessing corporate transition practices, ChinaAMC's ESG team evaluates not only emission reduction targets and capex, but also whether the transition pathway grow out of genuine demand, and whether it aligns with companies' core business and operational models.

Chinese Companies on-the-ground: Opportunities Outweigh Challenges
ChinaAMC's ESG team also conducted field visits and engagements with local Chinese enterprises. Through in-depth research on XCMG Brazil and LongPing High Tech Brazil, the team gained deeper insight into both the opportunities and challenges of operating in Brazilian market.

For example, the proportion of local value-added has become critical to companies' long-term growth both from both trade policy and branding perspectives—especially for companies engaged in government-related business. With financing costs as high as 15–20% and annual currency volatility could exceed 20%, a high local procurement rate can help secure policy and financing incentives while mitigating exchange rate risk.

In integrating into local industrial chains, it is essential to strictly adhere to supplier payment terms, which—along with timely wage payments—represent minimum operational baselines.

Moreover, compared to practices in China, contractor management requires greater rigor. Labor disputes arising from poor contractor management often result in additional administrative and legal costs for Chinese companies, and may even lead to joint legal liability. It is also worth noting that Brazil's labor inspection authorities conduct frequent unannounced site visits. Therefore, management of contractors must be deeply embedded in daily operations, not Potemkin village.

At the same time, local culture and mindset also present opportunities. Beyond government policy drive, Brazilian society and customers inherently value environmental protection, which in turn creates green business opportunities. For example, at XCMG Brazil, the cost of certain fully electrified construction machinery products is 50% lower than that of fossil fuel alternatives. Despite higher upfront costs, customer willingness to invest continues to grow.

Chinese companies also face systemic risks that require proactive mitigation. In addition to high financing costs, Brazil's tax system is stringent, with high overall tax rates and detailed compliance requirements. Enterprises must account for tax costs, establish specialized legal teams to build day-to-day compliance mechanisms, and maintain regular communication with embassies and regulatory bodies.

For agri-tech enterprises, the ESG team learned that despite multiple challenges, Brazilian operating environment also offers advantages. Notably, Brazil's intellectual property protection framework is robust, encouraging R&D in areas such as seed breeding and differentiated competition, thus providing a long commercialization cycle for R&D outcomes. LongPing, for instance, centers its strategy on local partnerships and community integration through technical support—such as dispatching agronomists to provide free planting training for local farmers. This approach not only aligns with business needs and local market conditions, but also avoids homogeneous competition and high inventory issues common in China.

In summary, for Chinese companies expanding overseas, success hinges not only on product strength, but also on the deepening awareness of intrinsic ESG value and management capabilities—realizing business breakthrough and sustaining long-term growth in overseas markets through professional compliance, localized operations, and business model optimization.

Xinran(Shirley) Xu, added: "This Brazil trip represents ChinaAMC's global perspective and sustained commitment to sustainability and ESG investing. We will continue to leverage research and on-the-ground practice to strengthen international investors' confidence in the long-term viability of sustainability efforts—and to help tell China's sustainability story to the world."

About ChinaAMC

Founded in April, 1998, China Asset Management is one of the first mutual fund managers in China. Since its inception, ChinaAMC has led the asset management industry with more than two decades of track-record in product innovation. ChinaAMC offers multi-asset investment solutions and one-stop services to investors with various risk-return profiles.

As of Sept 30, 2025, ChinaAMC's total AUM exceeded RMB 3.2 trillion (US$449.5 bn), making it one of the largest asset managers in China.

ChinaAMC identifies its core strength as discovering, defining and managing assets, as it offers a balanced mix of asset classes, encompassing equity, fixed income, FOF, REITs, money market,etc. It has been the largest ETF manager in China for 20 consecutive years with an AUM of over RMB 900 billion(US$126.4 bn).

Source: ChinaAMC. AUM includes subsidiaries. Data as of Sept 30, 2025.

Disclaimer

Investment involves risk, including possible loss of principal. The information contained herein is for reference only and reflects prevailing market conditions and our judgment as of the release date, which are subject to change without further notice.

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SOURCE ChinaAMC