Brazil and China celebrate this year the 30th anniversary of the re-establishment of diplomatic relations. On the political level, bi-lateral relations and multilateral co-operation, always very good, now face a renewed phase of excellency. Similarly, on the trade area, bi-lateral commerce has been at an all-time high, with an aggregated volume estimated of US$ 10 billion for the current year. China will become in 2004 Brazil´s second largest trade partner. On the other hand, Brazil has become China´s 3rd largest trade partner in the Americas, after the United States of America and Canada. Trade between Brazil and China grow naturally, as a result of the complementary nature of both economies. On a comparative basis with other regions of the world, this trade is remarkably free of major tensions and conflicts.
In addition, in spite of the distance between the two countries and the marked cultural differences, they are easily surmountable by business people of both Brazil and China, who also find a very strong personal and human basis to build co-operation. Now, as a result of the enormous growth of bi-lateral trade and of its complementary nature, business opportunities are abounding for Brazilian investments in China and for Chinese investments in Brazil. In Brazil, there is a great potential for Chinese investments in value-added operations in the agro-business and mineral sectors. The Brazilian markets for services appears also to be very attractive, particularly in banking and engineering. In addition, Brazil can be a formidable platform for the manufacture and regional export of many Chinese products, with better access tariffs and without the risk of suffering anti-dumping procedures encouraged against China by the current trade rules, until 2016.
Conversely, Brazilian investments in China can be attracted in the areas of manufactured goods, services and energy. In the area of services, banking and construction appear to be very attractive. In the first sector, this is so as a result of all bi-lateral opportunities and volume of trade, and in the second as a corollary of the spectacular continued economic growth of China during the past 25 years. The segment of distribution, particularly of food, appears to be also very interesting. In the area of manufactured goods, China offers not only an enormous internal market, but also very competitive conditions for a global export platform.
From a legal perspective, for Brazilian investors in China and for Chinese investors in Brazil, a number of similarities in the legal system of the two countries greatly simplify the task of understanding the institutional framework. These similarities only increased after China´s accession to the World Trade Organisation, on December 11 2001, which led the country to adapt many of its laws and regulations to the multilateral legal template. China today has not only very modern laws, but they are also very competitive. One such example are its tax laws of 1996, which are in the process of reformulation which will make them even more efficient, from both the business and government perspectives.
As a matter of fact, both China a Brazil have a long standing tradition in Civil law, which greatly differs from that of Common law, as is well-known. Thus, an understanding of the contract rules of China (or of Brazil), by a Chinese (or by a Brazilian) investor is much easier than, for instance, the understanding of the United States law of contracts, which is much more arcane. The Constitutions of both Brazil and China are very similar in their general structure and also in the protection of property rights, particularly after the recent March reform of the Constitution of the People´s Republic of China.
The foreign investment financial flows are regulated in Brazil and in China in very much the same manner, as a registration with the respective monetary authorities is necessary. However, remittance of profits and dividends, as well as the repatriation of capital can be effected without problems in both countries. Company formation is not an obstacle in Brazil or China and the corporate vehicles for joint ventures and for sole-ownership are similar, even if there are some differences. Shareholders´ agreements are not only possible, but common in both Brazil and China. Both countries accept a choice of foreign law to regulate contracts and enforce foreign arbitration awards domestically. Both China and Brazil have reputable arbitration centres for the resolution of eventual disputes.
Both countries protect similarly the consumer, the general public, the environment and intellectual property. In this last instance, both Brazil and China follow the framework TRIPS´ agreement of the WTO. Human rights are protected in a similar manner in both countries. The judiciary, the legal professions, the magistrates and the public prosecution services are organised in lines that are by no means dissimilar. The laws of both countries can be found in the English language, in addition to Portuguese and Chinese. The public administration is also structured in approximate lines in both countries.
In spite of all the similarities, of course lawyers are needed for assistance in both markets. A good lawyer will be able not only to explain the existing alternatives within the law of each country, but will also be in a position to support the respective client in bridging any cultural barriers that may exist, particularly at an early stage of operations. A good lawyer will also be in a position to introduce valuable relations in each country and will advise his/her client in dealing with the government of his/her respective country in all instances, be that at federal/national, state/provincial, or municipal level.
Thus, it is absolutely certain that there are no major legal barriers in either Brazil or China that may prevent business people of these countries to pursue their interests in investing in the other trade partner. On the contrary. The grounds are fertile, the path is open and the rules are clear.
Lawyer admitted in Brazil, England and Wales and Portugal. GATT and WTO panelist. Brazilian government ad-hoc representative for the Uruguay Round of the GATT. Post-graduation professor of the law of international trade.