The Devil’s Excrement At Work: The Chinese Fund, Suvinca And Cheap Imported Cars

September 19, 2013

Suvinca

A few months ago, I heard a strange tale of cheap Chinese cars being imported to Venezuela and sold for incredibly low prices. When I asked on limitations, I was told there were none, the organization they were telling me about could buy as many cars as it wanted. Just put a small down payment down per car and voilá, a few months later and upon delivery, you would pay the balance. To give you an idea of the prices, the down payment was less than Bs. 10,000 (US$ 1,587 at the official rate or US$ 244 at the parallel rate of exchange) and upon delivery you paid the balance, with the total cost being around Bs. 100,000, or US$ 15,870 at the official rate of exchange or US$ 2,440 at the parallel rate. Yes, less than US$ 3,000.

The whole thing sounded very fishy. I immediately thought it was some sort of scam via CADIVI, whereby someone was getting dollars at the official rate of exchange to bring these cars to Venezuela. But it sounded strange, why would the Government give official dollars to some scammer, rather than giving it to the car companies that generate work in the country?

After making a few inquiries, I tracked down the story behind the cars. In some sense, it is not a scam, it is somewhat legit. But in another it is an amazing example of how Chavismo has lost sight of what developing a country is all about. Moreover it is simply The Devil’s Excrement at work: Oil generates such wealth, that those in charge can’t think on how to use that wealth productively and instead waste it “doing good” to a  few, without generating any wealth or well being for the “people”.

Most of you have probably never heard of Suvinca. Suvinca is a company owned by the Ministry of Commerce, which is an acronym to the name “Venezuelan Industrial Supplies”. Suvinca is supposed to procure “the access to raw materials, inputs, capital goods, intermediate and finished, with the purpose of deepening the endogenous development of the country”

A noble goal indeed. But somehow, something was lost in translation. Or by the limited brains of the Revolutionary management. Because it turns out that Suvinca has access to the loans from the Chinese Funds. One of those loans, was partly in in the Chinese currency Yuan (70 billion Yuan if I recall correctly, almost US$ 10 billion at the time). Well, the money from these Chinese Funds is supposed to go roughly (my words) to:

“Projects within the National Development Program, that have high social impact, improve the standard of living, generate employment and consolidate some sectors which are considered a priority.”

Well, it turns out that Suvinca uses intermediary companies in the US, of all places, to import cars made in China, some made by US companies in China exclusively for that market, and which are paid with the Yuans from the loan from the Chinese Fund. Suvinca then turns around and sells these cars to chosen groups of individuals, at ridiculously low prices, since those Yuan are calculated at the official rate of exchange.

Thus, Venezuela’s “development” money. The same money that is borrowed from the Chinese, instead of being used to buy machinery, factories, equipment, as everyone envisioned, is being used to import Chinese cars. That’s it!

That’s what someone in the Chavismo stratosphere considers “development”

How low our country has fallen…

In fact, if you look through the news section of Suvinca, this “procurement” company, seems to do anything but what it was mandated to do. It sells cars, school supplies, produce in markets. But mostly, it sells cars, cheap Chinese imported cars, paid by the loan, as you can see if you go down the list of “news”.

It is all about cars, importing them and selling them to buddies. Many quite well off, actually, like my friend.

Thus, we get a loan to import stuff, undercutting local producers who went more than a year without Cadivi giving them much and likely importing many cars that are not even supposed to come to Venezuela and for which there are no spare parts or support.

It’s The Devil’s Excrement at work, as implemented by brainless bureaucrats, whose only qualification to preside those institutions, is loyalty and ideology to the brainless revolution.

And President Maduro? In China, getting another one of these “development” loans.

21 Responses to “The Devil’s Excrement At Work: The Chinese Fund, Suvinca And Cheap Imported Cars”

  1. m_astera Says:

    The common people didn’t ask for that loan, nor do they benefit from it, but the future productivity of each citizen and the country’s native resources are on the hook for it. Odious debt.

    • NorskeDiv Says:

      This is worse than any IMF loan. I don’t think China intended it this way, but if this is the way money loaned to Venezuela is being spent it’s the textbook definition of neo-colonialism.

  2. HalfEmpty Says:

    Soon the Chinese will learn the way of Expropriate!

  3. Pedro Says:

    This one takes the cake.

  4. Tom ODonnell Says:

    Just like US and British loans of the past … and Brazilian loans nowadays, these Chinese loans are to be spent on the motherland’s industrial goods. Being that they are in Yuan helps insure they are spent on Chinese goods.

    A nice bit of investigative reporting.

  5. Glenn Says:

    Tom is dead on. The Chinese business model is to ‘loan’ countries money to be spent on goods manufactured in China or on Chinese labor and resources to be used in projects. The profit on both ends.

  6. syd Says:

    Congratulations, Miguel, for investigating the nuts and bolts of apparent development, for tracking down the information that began with a friendly source, and for having the knowledge base to interpret and write about it.

  7. VJ Says:

    According to El Universal, Sep. 2nd 2013, there was a scam with the Chery cars offered by SUVINCA.

    http://www.eluniversal.com/economia/130902/surge-estafa-a-partir-del-sistema-estatal-de-venta-de-vehiculos

    “El pasado 28 de julio un grupo de unas 80 personas asistió a la planta de Chery de Venezuela, empresa estatal ubicada en el estado Aragua. Era el día indicado para recibir los vehículos por los cuales habían pagado al menos la inicial. Pero al arribar a la ensambladora comprendieron que habían sido estafados.”
    See the faked document:http://cdn.eluniversal.com/2013/09/02/CertificadoFalso.jpg

  8. Simon Says:

    Hi!, This time I would like to request your perspective to please look into the following company TELEXFREE USA as potentially running a Ponzi Scheme. The Company started in Brasil years ago and most recently it has been shut down by a judge in Brasil who found them guilty of running a Ponzi scheme.

    I am very concerned as Telexfree is expanding outside of Brasil and capturing customers from around the globe including Vzla and lots of naive people are falling for making easy money. I have several friends that have joined the scheme and are trying to make me join it but I prefer to use common sense and report it to the experts.
    The Web Site is http://www.telexfree.com/
    Thanks!!

  9. Ira Says:

    Why should anyone care about this, when Maduro is bitching to the world that the U.S. denied him overflight permission–even though it’s clear that they never properly applied for it in the first place?

    Miguel, sometimes I think it might be better to focus less on the real damage Chavistas are doing to VZ and the world, and instead, concentrate on the stupid little things, the stupid little LIES, to make out point.


  10. […] The Chinese Fund, Suvinca And Cheap Imported Cars – The Devil's .A few months ago, I heard a strange tale of cheap Chinese cars being imported to Venezuela and sold for incredibly low prices. When I asked on limitations, I was told there were none, the organization they were telling me. […]


  11. […] Meanwhile, cars imported by the Government are increasing. Veneconomy reports that while SEAT and Honda have not been given licenses to import cars for six years, independent importers related to the Government have been give licenses to import Chinese cars from distributors which are not even China based. They expect that 30,000 such cars will be imported this year. I wrote about some of these imports a couple of months ago. […]


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