The plans of China’s YOFC in Latin America

YOFC, or Yangtze Optical Fibre and Cable, is increasing its investments in Latin America, betting on demand from telcos and energy companies.

In Mexico, the company announced the start of production at its first local plant, whereas in Brazil the group is anticipating a pick-up in orders from internet service providers (ISPs) and major carriers.

“The market overall has been a bit down this year. Last year was stable. But operators have already changed their investment levels, and we have seen new bids [for fiber] coming out that anticipate growth in demand. The outlook is for an increase in demand for 2025,” Reinaldo Jeronimo, CEO of YOFC Brasil, told BNamericas.

“We at YOFC, specifically, however, if you compare this year with the same period last year, are growing more than 50% in the country,” he added.

YOFC has contracts or closed specific sales with all the main operators in Brazil and around 800 ISPs to date, according to Jeronimo.

Among YOFC's new local contracts is one for the supply of microcable technology for Telefônica Brasil, the market leader in the fiber broadband segment.

The company's Brazilian plant currently has capacity to produce 1.5Mkm of fiber per year, although not all of this volume is sold, and it could be scaled to 3Mkm without major investments.

"The building, the machinery, are ready to reach that volume, if necessary," said Jeronimo.

MEXICO

In Mexico, YOFC said its arrival comes in response to growth driven by government investment and reforms in the optical communications sector and that it expects to create hundreds of local jobs. 

Investment amounts were not disclosed.

The facility in Jalisco state adds to existing YOFC plants in Indonesia, South Africa, Brazil and Poland and will supply fiber cables and associated products to the expanding Mexican market.

“YOFC’s move to increase its investments in Mexico and enhance market integration underlines its dedication to building a long-term presence in the region,” the company said in a statement.

YOFC Mexico Cable is 24.5% owned by YOFC Singapore and 75.5% by YOFC Hong Kong. 

Established in 1988 in Wuhan, YOFC produces fiber cables for the telecom and energy sectors and, at least since 2014, has expanded its international reach and businesses in part within the framework of the Belt and Road initiative.

At present, the company reports around 1,300 global patents, 9,100 employees, and operations in over 100 countries and territories. 

This presence includes 40 investment companies and more than 30 offices and subsidiaries, including in Brazil, Argentina, Peru and Mexico, according to the firm. 

PERU

In Peru, YOFC established a subsidiary in January 2019. In July that same year, the company secured a contract with the government for broadband projects in the regions of Áncash, Arequipa, San Martín and La Libertad.

From 2019 to 2023, the company invested 2bn yuan (US$280mn) in Peru.

INTERNATIONALIZATION

YOFC is not only expanding in Latin America but also focusing on other emerging markets.

On July 12, the group announced it completed the expansion at its Poland production plant, inaugurated in March 2021.

“The company will continue to expand into the international market, optimize local production, sales and service capabilities, to achieve a continuous increase in the proportion of overseas business revenue,” YOFC said in its 2023 annual report.

Overall, YOFC posted 2023 revenues of 13.4bn yuan, down 3.5%.

Revenues from its domestic business decreased by approximately 1.9%, whereas overseas revenue declined by around 6.5%.

COMPETITION AND DUMPING

Because it manufactures locally in Brazil and in Mexico, YOFC is seen by major regional industry players, such as Italy-based Prysmian or Japan's Furukawa, as a fair competitor, unlike Chinese fiber exporters, BNamericas has learned, as debate about dumping intensifies.

There are currently two connected investigations into dumping for the sector in Brazil. One relates to cables and the other to fiber optics.  

“Today we are also very harmed by a market that comes from abroad and that does not have, let's say, a very honest policy. In the cable sector, we are in favor” of anti-dumping measures, said Jeronimo.

Local cable manufacturers produce enough to meet Brazil's demand, he said.

The executive, however, opposes anti-dumping measures for fiber, arguing that he has “doubts” whether the main factory in the region, Prysmian's, is capable of meeting market demand.

Prysmian’s plant in Sorocaba is deemed the only one in Latin America producing all components that are part of the fiber optics cycle.

"In fiber, I don't see subsidies from the Chinese government for the cost of the product. It's an international price," said the executive.

YOFC and Prysmian also have commercial ties. YOFC’s bookings show that the company sold products to Brazilian unit Prysmian Cabos e Sistemas in 2023.