Client Insight > Colombia


What’s driving Chinese investment into Colombia?

We have seen more Chinese parties shifting investment attention overseas to projects in Latin America. While Colombia has not historically seen a large number of Chinese investors the wave of infrastructure projects in Colombia has driven the attention of large Chinese SOEs and private companies.

Matters in which we have been involved are typically driven by SOEs; but we expect to see an increasing number of Chinese private investors and entities looking for opportunities in Colombia. Our Chinese prospective clients are usually interested infrastructure projects, including ports, public utilities, and mass transportation. Another area of interest is energy: clients will frequently ask for opportunities in generation, transmission and distribution of electricity.

How is Posse Herrera Luis positioning itself to help clients capitalise on these opportunities?

Business interaction between China and Colombia is increasing. As a firm we have taken the decision of getting to know the Chinese business and legal market, so that we may pass along such knowledge and cultural sensitivity to our clients. This means getting to know the country and our local legal partners. Building and maintaining business relationships with local law firms and SOEs is essential for successfully doing business and assisting our Chinese potential clients.

We consider that the support of local Chinese counsel is critical to achieve an effective interaction with clients, since their assistance may help to bridge the cultural gap and to pass along valuable information which in turn we can use to better serve our clients.

What are some of the challenges Latin American entities need to be mindful of when engaging with PRC counterparties?

Having different cultures and different languages is always a challenge, as well as situations resulting from different work styles and dynamics. Cultural understanding is key. Latin American parties must learn that formality is a key element in business negotiations with Chinese counterparties. Of course there are also many difficulties arising out of using different technologies and working in very different time zones, which may lead to working during times away from the office, or early in the morning and evenings.

The decision-making process in projects with PRC clients may take longer than in projects with domestic clients. The speed of projects may be different, and obtaining internal approvals for a project may be a lengthy process. In general, transactions involving PRC clients may take longer than what it would take for a domestic client.

PRC-based clients who wish to enter the Colombian market should pay attention to and ask thoroughly about labor and environmental regulations, and the protection that our legal system grants to foreign investments. A Chinese client will also be concerned about getting a fair and just dispute resolution mechanism. If the project involves a public tender, then the concern is shifted to how fair and objective the selection process is, and whether there is a bias in favor of local bidders.

On the other side, Colombian companies wishing to do business in China must think about issues such as how to operate legally in China, how to obtain adequate protection of intellectual property, compliance with local foreign exchange regulations and compliance with local tax and import duties.