Companies keep eyes on market in Brazil

Brazil is becoming an increasingly attractive investment destination for China's listed companies, according to the China Association for Public Companies.

Li Xiaoxue, executive vice-chairman of the association, said on Monday that many listed companies in China are seeking professional advice and consultation services to develop business in Brazil.

According to a survey conducted by the association among 200 of its member companies, 20 percent expressed an interest in investing in Brazil's energy sector, while 15 percent were seeking opportunities in the country's mineral industry.

China's total investment in Brazil reached $10.4 billion in the first 10 months of this year, compared with total foreign investment of $66 billion over the same period, said Marcos Caramuru, the former general consul of Brazil and the CEO of the KEMU Consultancy.

He Zhengwei, deputy general secretary of the China Industrial Overseas Development and Planning Association under the National Development and Reform Commission, said Chinese investment in Brazil was likely to maintain its rapid growth rate over the next two years.

"Brazil's relatively stable political environment and the expected appreciation of the renminbi will accelerate Chinese businesses' expansion in the country, China's biggest trade partner in Latin America," He said.

In the meantime, Brazil's automobile, agricultural and infrastructure construction industries are attracting Chinese listed companies, according to the association.

"Opportunities are increasing in Brazil for Chinese businesses," said Tatiana Rosito, minister-counselor and deputy chief of mission at the Brazilian embassy in Beijing.

The Brazilian government's large investment package in capital-intensive transportation infrastructure projects, totaling around 130 billion Brazilian real ($62.4 billion), will provide investment opportunities for Chinese companies, Rosito said.

In order to avoid potential risks, Chinese business leaders ought to understand the investment limits and the legal environment before deciding to invest in Brazil, said Caramuru.

Purchasing equities in Brazilian companies may be a better way to invest than directly buying resources such as land and minerals, he added.

"Chinese financial institutions, such as commercial banks, could consider mergers and acquisitions with small Brazilian banks, which would be an easy way to get to know the local business environment," he said.

Bank of China Ltd and Industrial and Commercial Bank of China Ltd have so far launched branches in Brazil, while China Construction Bank Corp and China Development Bank are preparing to open branches in the country. In addition, China International Capital Corporation and Citic Securities have started business in Brazil.

China's listed companies will be the main force leading the global expansion of the nation's businesses, as they have advanced management systems and equity governance structures, said Zhuang Xinyi, vice-chairman of the China Securities Regulatory Commission.

By the end of 2011, the total market value of Chinese public companies accounted for 46 percent of the nation's GDP, according to the association.

"Public companies are encouraged to actively seek opportunities for overseas expansion based on in-depth research of foreign countries' economic, social and cultural environments," Zhuang said.

The commission will support professional organizations and intermediary agencies, such as the association, to provide services and guide listed companies to develop their business and increase direct investment in overseas markets, he added.