Several Chinese Stores Close in Nicaragua
Business Strategy or Market Saturation?
The sudden closure of several Chinese businesses in Managua and Masaya has raised suspicions among economists.
HAVANA TIMES – The “definitive” closure of the Chinese Bazaar, a variety store in Managua, came as a surprise to its thirty employees. They received no explanation, and a long line of customers looking for discounts kept them busy through the last days of October.
The abrupt shutdown revealed another face of this type of investment in Nicaragua. After the wave of Chinese-owned shops that followed the implementation of the Free Trade Agreement in January 2024, some have recently chosen to close. The decision, according to two economists consulted, raises questions.
Consultant Hernan Alberro, an associate researcher at China Index—a group that studies China’s global relations—knows this type of business well in Latin America. “It’s strange, very strange. One possibility is that it’s simply a marketing strategy—to liquidate stock and prepare for the entry of new products or a business reconfiguration,” he said.
In addition to the Chinese Bazaar, 100% Noticias confirmed the closure of Enzo Store, in the Altamira neighborhood. There are other cases: a shoe shop closed in Managua, while in Masaya, for example, some of the same businesses have reopened as Chinese restaurants. “It seems selling the same things as everyone else didn’t work,” a resident of Masaya commented.
Alberro believes investors are still trying to understand the local market—what kinds of products and prices work best. Nicaragua has one of the lowest income levels in Latin America. According to the World Bank, per capita daily income was about US $7.87 last year.
He also doesn’t rule out the possibility that it’s a tactic to generate foot traffic and take advantage of customers’ interest in discounts. However, Alberro recalled another pattern in which supposed investors—even wholesalers—open businesses, obtain visas or residency, and then close them to reopen under another name. In that way, they take advantage of existing legal frameworks and weak oversight. “It’s noteworthy and deserves monitoring,” he said.
Saturation of Chinese Products
Economist and sociologist Oscar René Vargas, exiled in Costa Rica, believes the phenomenon is more complex than simple business failure. He points to market saturation among Chinese stores. He notes that on a single street, shoppers could find as many as seven shops, and in a small town, up to fourteen. “In other words, Chinese stores are competing with one another and closing each other down.”
Vargas added that this internal dynamic can be traced to the optimistic narrative that accompanied the Free Trade Agreement implementation. Many traders saw the agreement as an opportunity to import cheap products directly, without evaluating the real capacity of the local market. The expert said that the idea took hold that opening a Chinese store was “a synonym for quick success—but saturation came far too soon,” he noted.
Meanwhile, the most worrisome impact, Vargas warned, falls on local entrepreneurs, since the proliferation of such businesses is “killing” Nicaragua’s productive fabric. Local artisans and traditional merchants cannot compete with the low prices of Chinese goods, which enter Nicaragua under preferential tariffs and minimal import costs. Over time, such state policies destroy jobs, discourage local production, and weaken domestic consumption, according to Vargas.
The implications are also social and political. “We’re talking about a process that can worsen unemployment and social discontent. Each time a local store or workshop closes, it’s not just a business that disappears—it’s a source of income for families already at their limit,” he said.
A Deep Structural Imbalance
The Free Trade Agreement with China has deepened Nicaragua’s structural imbalance, according to the study Chinese Investments in the Commercial Sector: Implications for Competitiveness and Decent Work, published in 2025 by the Fundación Sin Límites para el Desarrollo Humano (No Limits Foundation for Human Development).
This foundation, a regional think tank based in Costa Rica, reports that imports in Nicaragua are growing at double-digit rates, while Nicaraguan products continue to have only marginal access to the Chinese market.
Official data show that imports from China reached US $783.1 million between January and May 2025—15.7% of Nicaragua’s total imports. Just two years earlier, that figure was 12.7%. With this increase, the China has become Nicaragua’s third-largest supplier of goods.
In contrast, during the same period, Nicaragua’s exports to China amounted to only $69 million, representing just 1.9% of the total. Although exports rose slightly, Nicaragua’s main trading partners remain the United States (45.5%) and Central America (16.8%).
“The opening of trade has primarily benefited importers with direct access to Chinese suppliers, while Nicaraguan companies face higher costs, narrower margins, and more precarious labor conditions,” the study states.
According to the same organization, around 400 new Chinese-owned retail businesses have been established in Nicaragua over the past year, focusing on products such as cosmetics, kitchen utensils, and household goods.
Vargas adds that by promoting favorable agreements and conditions for Chinese investment, the regime of Daniel Ortega and Rosario Murillo, is “playing with fire.” “Paradoxically, this model, presented as a symbol of prosperity, could turn against them. The invasion of Chinese stores, encouraged by the regime itself, ends up hurting it. People who go bankrupt or lose their jobs because of this unfair competition build up resentment that will eventually express itself—maybe not openly, but as a silent rejection of the economic and political model that allowed it,” he warned.
On October 29, Laureano Ortega Murillo—the son of Daniel Ortega and Rosario Murillo and their liaison with China, Russia, and Iran—was appointed coordinator of a commission to oversee the proposed Belt and Road Special Economic Zones. These zones, promoted by the Nicaraguan regime, offer tax, customs, and administrative incentives to attract Chinese capital.
Managua and Beijing reestablished diplomatic relations in 2021. Since then, their partnership has been marked by a surge of investment promises, Nicaragua’s accelerated indebtedness, and the granting of Chinese mining concessions by Ortega. Both regimes back each other politically: China invokes Nicaragua’s sovereignty to deflect international criticism, while the OAS and the UN have for years demanded that Managua account for its human rights abuses since 2018.
First published in Spanish by 100% Noticias and translated and posted in English by Havana Times.