At the height of the Portuguese empire, Macau was a vital lynchpin along the key trading routes during the ‘Age of Discovery’. And while the Portuguese empire would soon fade, Macau retained its importance between the East and the West.

Then it was silk and spices that meandered from Macau to Mallaca and on to Madrid or Munich, but now a different kind of commodity is being traded. China’s meteoric rise, and its desire to tap into the seemingly endless reserves of natural resources across the lusophone world has seen capital flow freely across the Portas do Cerco – en route to Brazil, Angola and Mozambique. Although such capital flows are still in a nascent stage of development, they have the potential to become significant, not only for the SAR’s economy, but also for its legal services market.

‘Irreplaceable’ investment channel

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, 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 fallins by more than a third on the previous year. But these figures quickly rebounded, on the back of increasing Chinese interest in Brazilian and Angolan mining assets. Recognition that there is still considerable untapped potential is widespread, 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.

Although the deal pipeline is not overflowing with transactions at the moment, a number of lawyers in Macau are already aligning their practices to capitalise 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 Goncalo Mendes de 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. The firm 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 Macau 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 headstart for this type of work,” said Mendes de Maia. We have had a number of enquiries.”

Given that many of the deals in this area have not come to market yet, Mendes de Maia and his team have been working with Chinese funds and SMEs looking to enter Portuguesespeaking markets.

Slow change

But Mendes de Maia, as well as a number of other law firms ALB interviewed, are unsure as to whether other local players will look to follow their lead. Bruno Alves, a partner with BN Lawyers, said 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.”

For now, Mendes de Maia 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; the top firms will be competing for talent.”

While the majority of the work on offer in the fast-growing area of China-lusophone investment is yet to crystallise, consensus opinion is that it will. 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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