Forum Macao Ministerial Meeting

Six years after the last Ministerial Conference, the Forum for Economic and Trade Co-operation between China and Portuguese-speaking countries (Forum Macao) held an Extraordinary Ministerial Meeting today, April 10, 2022.

Founded in Macau in 2003, the Forum Macao is aimed at enhancing economic and trade exchanges between China and Portuguese-speaking countries. Chinese Premier Li Keqiang argued that Macao is a bridge connecting China and these countries. The central government of China unswervingly implements the principles of “one country, two systems”, Macao people administering Macao, a high degree of autonomy, and supports Macao to further build a service platform for business cooperation. So take advantage of your unique advantages! It is believed that with joint efforts, the mutually beneficial cooperation between the two sides will steadily advance and more achievements will be made.

During the meeting, the Portuguese Prime Minister also defended the strengthening of cooperation with China. He recalled that Portugal opens the door to large markets, such as the European Union, Latin America and Africa, mainly due to the relationship with Portuguese-speaking countries. Portugal is "a gateway to the European Union" and to other markets, such as Latin America and Africa, namely because of its "proximity with Portuguese-speaking countries".

The goodwill and kind words used today are good news for multilateralism and international trade. Regarding Chinese investment in Portugal, it is public that subsequent to ten years of different acquisitions, the Portuguese government is now expecting greenfield investments. That is, the creation of new companies or subsidiaries in Portugal, which will create new jobs for the Portuguese people. This can be achieved in one of the following ways:

1. Sole Venture: The investing company holds 100% of the invested capital (it is the parent company);
2. Joint Venture: The capital of the company to be invested is held by several parent companies.

A sole venture assumes that the investing company assumes full control of the activities and does not establish any type of partnership. Easy access to raw materials, benefits in terms of the cost of human resources and the non-payment of import duties are some of the advantages to be highlighted. However, the company that invests is more vulnerable and susceptible to economic and political variations in China.

A joint venture consists of a strategic alliance between at least two independent companies that share the share capital and, consequently, the decision-making power of the acquired or created company. As a rule, the investing company associates with at least one local company to share know-how and market knowledge. Thus, reducing the risk of internationalisation and making it easier to integrate into local commercial networks.

In both cases described above, the investment from scratch implies the creation of new infrastructures (factories, subsidiaries, branches and other commercial entities). It is a riskier type of investment, because it often involves a high initial investment and some uncertainty regarding eventual profits and income.

As explained, both forms of greenfield investments are welcomed in Portugal.