What’s driving Chinese investment into Peru?
Many in Peru expected to have an important flow of PRC-based companies in the last years but investment has reduced considerably.
The sectors in which we see particular interest are construction, infrastructure, energy and transportation. There are several interesting opportunities in these sectors with, essentially, public projects such as a gas pipeline from the central jungle of Peru all the way down to its southern coast, and a commuter train around Lima, Peru’s capital.
How is García Sayán positioning itself to help clients capitalise on these opportunities?
We try to find alternative solutions to the aforementioned challenges, especially to get the documents in order to comply with the requirements established by Peruvian laws. For this, we usually work with the Chinese Peruvian Chamber of Commerce and the Chinese consulate, which are very helpful issuing letters to the local authorities explaining the purpose and characteristics of certain documents issued in China in order to make such documents acceptable for purposes of all legal procedures. As an example, we have been able to have the Public Records Office accepting the municipal license of a PRC’s company willing to stablish a Branch in Peru, as its certificate of good standing which is the regular requirement and a document of a different nature.
What are some of the challenges Latin American entities need to be mindful of when engaging with PRC counterparties?
All our PRC clients are SOEs aiming to enter into contracts with the Peruvian State; hence, in addition to incorporating a local branch or subsidiary, they needed to deal with the proper regulator in order to obtain specific registrations depending on the activity they plan to perform.
Peruvian government entities have set certain processes or requirements for local or foreign investors which may be complied-with as long as they understand and share similar documentation and procedures. PRC companies will have to deal with the limited scope of action of, for example, Chinese Notary Publics, which cannot issue all the certifications that a regular Notary Public in Peru or in other countries with an analogous legal system can do.
More than legal considerations, however, there are practical matter to be taken into account. Language is an issue. Many representatives speak some English and very little Spanish; hence attending meetings with an interpreter may cause certain communication problems with government officers. There are also cultural issues such as negotiation styles, where Chinese citizens have an advantage, although having them speaking in Chinese in front of their local counterparts may not be always advisable. Sometimes the decision making process may generate delays when an approval from a higher authority, located in China, is needed. The time difference plays a key role in this last situation.
Finally, courtesies and discounts are expected as part of the Chinese culture, but clients have to be careful not to participate in practices that could be later related to compliance regulations infringement.
Recent experience and representative matters
During the last years, we have worked with three Chinese companies: China Railway First Survey & Design Institute Group Railroad, China Petroleum Pipeline Bureau and China Civil Engineering Construction Corporation. The services we provided were handled by the corporate and administrative law areas, mainly referred to the incorporation of the Peruvian branches of said companies and their subsequent registration in the Peruvian State Contracting Supervisory Body – OSCE (Organismo Supervisor de las Contrataciones del Estado), as well as additional legal advice on other matters.
In addition, we have a longstanding relationship with Sapet Development Peru Inc., an oil company operating in the North West area of Peru and provide legal assistance to CNPC International (Peru) Ltd.