Chinese Premier Wen Jiabao’s recent visit to Macau as part of the Third Ministerial Conference of the Forum for Economic and Trade Cooperation between China and Portuguesespeaking Countries is significant on a number of levels. Not only did it confirm China’s interest in reinvigorating flagging investment levels into Portuguese-speaking countries, but it also indicated the special role that Macau must play in the whole process.

Trade volumes between China and the lusophone world were among the worst hit by the financial crisis. In 2009, trade between China and Portuguese-speaking countries fell by more than a third on the previous year. But as Asia rebounded from the financial crisis, these figures quickly rebounded on the back of increasing Chinese interest in Brazilian and Angolan mining assets. But the improvement in trade levels notwithstanding, there is a widespread recognition that there is still considerable untapped potential, and Macau is viewed as the ideal platform to harness this.

“Macau has an irreplaceable role in serving as a channel for Chinese SMEs, particularly those hailing from the Pearl River Delta, to enter the Portuguese-speaking markets,” said the vice-president of the China Council for the Promotion of International Trade, Zhang Wei.

And although the deal pipeline is not overflowing with transactions at the moment, a number of lawyers in Macau are already aligning their practices to capitalize on what is expected to become a US$300bn market by 2015.

‘In terms of Chinese companies looking to enter Portuguese-speaking countries, now is the right time,” said said Goncalo Mendes da Maia, a partner with Macanese firm MdME. “We have seen an increase in outbound volumes coming out of China over the last 18 months and an increased willingness of Chinese companies to look to Macau as a platform for their investments.

According to Pedro Cortes, a partner with fellow Macanese firm Goncalves Pereira Rato Ling Vong & Cunha Advogados (Lektou) it is Macau’s strategic location in the PRD region, together with its linguistic and cultural ties to Portuguese-speaking countries that are most appealing to Chinese companies. “Macau can serve as the bridge for Chinese companies looking to access Portuguese-speaking markets…through the connections of lawyers at Macau law firms, as well as through our knowledge of how business is done there,” he said. Lektou, which has a focus on banking & finance transactions, is already acting for a number of Chinese companies based in Macau in relation to Hong Kong capital markets work and believes this could serve as a launching pad for picking up a share of outbound work targeting lusophone countries.

MdME’s approach, however, is more direct. While many, if not most, of the major players in the Macanese legal services market have some international connections (more often than not this is in the form of a Portuguese office), MdME is among the first to have direct access to resources on the ground in Angola, Mozambique and Brazil by virtue of its alliance with Portuguese player Morais Leitão Galvão Teles Soares da Silva & Associados (MLGTS).

“We believe the move gives us a head start for this type of work,” said Mendes. “Our clients have so far reacted very well to the news of the alliance and we have a number of enquiries.” Given that many of the deals in this area have not come to the market, Mendes and his team have been working with Chinese funds and SMEs looking to enter Portuguese-speaking markets.

Slow change

But Mendes, as well as a number of other law firms ALB interviewed as skeptical as to whether other local players will look to follow their lead. Bruno Alves, a partner with BN Lawyers, said that even with China’s increased willingness to use Macau as its investment platform for the Portuguese speaking world, the Macanese legal services market remains very domestically focused.

“Gaming, tourism and leisure and local finance work, have been the mainstays for most of the law firms in Macau for most of the last 20 years,” he said. “Some firms have been focusing on the Hong Kong market closely of late, but others have enough local work to keep them going.”

Lektou partner Frederico Rato agrees, saying that if change does happen, it will happen slowly. The focus for many Macanese firms remains Hong Kong. “The Macau legal market has always been quite insular and very domestically-focused,” he said. “When firms have looked internationally, they’ve traditionally looked no further than Hong Kong and if you ask the commercial law firms here most will tell you that Hong Kong accounts for close to 50% of their work…changes will happen, but it will be gradual.”

For now, Mendes believes that while wholesale structural changes may not be on the horizon, the importance of having the right China connections is manifesting itself in the employment market. “We are looking to bring Chinese lawyers on board at the moment and from what I understand so are a number of other law firms,” he said. “This is where we may immediately see some changes and the top firms will be competing for talent.”

While the majority of the work on offer in the niche, but fast-growing area of China-lusophone investment is yet to crystallize, the consensus opinion is that it will. Law firms that make the move into the area early, and equip themselves with the resources to handle such transactions will themselves become irreplaceable to clients.

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