The diplomatic relationship between Brazil and China began in the 19th century. This relationship became closer in the ’90s due to a more complementary commercial approach. Since 2009, China has been Brazil’s leading trading partner. The economic connections between the countries have brought them closer despite the great geographic distance.
Brazil is a crucial commodities supplier, whereas China provides mostly raw materials, supplies, and machinery to Brazil. China additionally plays a vital role in the Brazilian economy since it buys more than it sells. Since 2010, China is also responsible for heavy investments, especially in energy and infrastructure. In 2019, China invested USD 1.9 billion in Brazil, following the Chinese government commitment made at the 11th BRICS summit in Brasília to invest UDS100 billion.
From January to October 2020, 21.6% of all products imported to Brazil were from China. According to Mr. Yang Wanming, Chinese Ambassador to Brazil, more than 300 Chinese companies invested in Brazil, of which 25 ranked in the top 500 companies globally. The closer connections between the two countries are even more evident now with the joint efforts to elaborate a vaccine against COVID-19.
China considers Brazil as a strategic partner. This scenario presents an opportunity for Brazilian companies that want to expand their businesses to China, even more so after the country’s new Foreign Investment Law came into effect last year, which aimed to make foreign investments in China safer and easier.
Establishing a business in China can present a range of strategic benefits to Brazilian companies, especially to those that wish to partake in product import-export services or establish their operational focus on the Chinese market, from preparation to the distribution of their products services. Although not every company has the same needs, we list a few benefits of establishing a company in China:
- Access to foreign investment protection as a China-based entity
- Obtain Chinese-speaking skilled workforce
- Closer contact with Chinese suppliers
- Access to one of the biggest consumers markets in the world
Understanding the potential of these fruitful economic relations between Brazil and other Latin American countries, Mr. Thomas Wong, Partner of CW CPA, established a team entitled ‘Latin Department’ to serve Spanish and Portuguese-speaking clients. One of CW’s differentiating factors is that we offer experienced native-speaking advisors that attenuate the cultural differences, thus making the navigation through the complex Chinese market smoother.
To date, our Brazil Desk is a division under the Latin department, assisting various sizable Brazilian companies operating in China, with two Brazilian advisors, namely Kemelly Vera and Rafael Fraga. Our Brazil Desk focuses on international retailers, technology equipment manufacturers, and medium-sized traders that are sourcing components from mainland China. If you are looking to capitalize on China’s market opportunities, please contact our Brazil Desk:
Kemelly Vera | LinkedIn profile
Rafael Fraga | LinkedIn profile
Market Explorer Webinar: Business Opportunities in Mexico
Hosted by the Hong Kong Trade Development Council, the webinar “Business Opportunities in Mexico” provides insights into Mexico’s current investment situation. Focused mainly on companies settled in the Greater Bay Area and targeted at expanding their operations to North America, the presenters provide invaluable perspectives, including the latest development of the Trade Agreement with the northern neighboring countries of Canada and the USA, important economic data in terms of trade, Gross Domestic Product and business environment.
The presenters include Charlotte Man, Economist from HKTDC; Susana Munoz, President of MexCham Hong Kong; our Partner, Thomas Wong and our colleague, Luz Martinez. We are delighted to share a specific case study of a Chinese company investing in Tijuana, Mexico. This case has also discussed the USA border’s strategic positioning as a significant commute during the start–up process in Mexico.
Click here to watch the full webinar
Written by Luz Deneb Martinez, Latin Department, CW CPA
SAS (SOCIETY OF SIMPLIFIED SHARES) IN ECUADOR
On 28 February 2020, the Organic Law of Entrepreneurship and Innovation was published In Ecuador, which establishes for the first time the definitions and mechanisms for the creation, control, and procedures of SAS in Ecuador. On 25 September 2020, Simplified Stock Companies’ regulation was issued to establish the determining points of this type of companies.
DEFINITION OF A SAS
It is a type of authorized company in which the creation procedures and the costs associated with said procedures are simplified. Its objective is to formalize and regularize the enterprises, for which it was formalized in the Organic Law of Entrepreneurship in Innovation.
One of the advantages is that they favor simplifying the process, such as the preparation of deeds, additional notarial acts, face-to-face and limited acts that previously prevented the creation of new companies due to the lack of resources to be able to carry them out.
The SAS are companies born in response to a purely commercial need, and this situation limits the company’s ability to have financing resources such as entering the stock market. The solution to be able to quote would be to change the company’s name according to the requirements to be able to do so if the company so wishes.
REQUIREMENTS TO CONSTITUTE A SAS
The essential requirements to constitute a SAS are the following:
- Electronic certification of shareholders: It should be noted that, for this type of electronic documentation, it is necessary to previously obtain an electronic signature among the types of entities that provide this service of authorized electronic signatures are Central Bank of Ecuador, Security Data, AnfacAuthorities of Certification Ecuador CA and the Council of the Judiciary.
- Domain reservation: For this, it is necessary to previously create a user on the page of the Superintendency of Securities and Insurance Companies, or if you have one, enter the corporate sector, with the username and password, then choose the option to reserve a domain, enter the constitution option and follow the steps indicated by the system to generate a document, which must be printed at the end of the reservation process.
- Additional documentation: To finalize the process by the user, it is necessary to download and fill out the registration forms,such as the contract, appointments, and registration forms. Said documentation can be found on the Superintendency of Securities and Insurance Companies’ website when entering the “User Guide” It should be noted that all these documents must be signed electronically by the natural or legal persons that will make up the SAS. Later they will be sent to the email address of the corresponding office.
Once the previously indicated procedures have been complied with, a validation review will be carried out by the company registration area, which will be in charge of completing the registration process once all the documentation has been completed.
CAUSES OF DISSOLUTION
Unlike those of the other types of company or company names, an SAS‘ recurring losses for at least the first five financial years are not considered as grounds for dissolution. However, the following points are considered as grounds dissolution:
1. Failure to comply for three financial yearswith the provisions of article 20 of the Companies Law, which indicates the following:
- Balance sheet, statement of profit and loss accounts, reports and reports of the administrators of inspection bodies duly approved by the General Meeting of Partners and Shareholders, as the case may be;
- Payroll of administrators, legal representatives and or partner and shareholders in accordance with international standards of transparency in tax matters and the fight against illegal activities;
- Other types of information requested by the control body.
2. Expiration of the term of duration of the SAS, indicated in the company’s bylaws unless an extension is established by means of registered documents before its expiration, and;
3. Bankruptcy order of the company, legally enforceable.
To these grounds for dissolution, all those provided by the Company Superintendent will also be added, as long as any of the following situations exist:
- Manifest impossibility of fulfilling the corporate purpose for which it was established, or when it is definitively impeded, due to factual or legal circumstances, from carrying out any operational activity;
- The activities for which it was established would have concluded when its statute would have limited its operational capacity to one or more business activities;
- Non-compliance with the Law, the regulations, resolutions,and other regulations issued by the Monetary and Financial Policy and Regulation Board or the Superintendency, as appropriate, or the bylaws of the company;
- Intervened companies that refuse to pay the auditor’s fees or do not provide the facilities for him to act;
- Impediment or difficulty for corporate control inspections, in accordance with the provisions of article 440 of the Companies Law;
- Has not overcome the causes that motivated the intervention of the company, after a report from the Superintendency’s control area recommending the dissolution; and
- According to its financial statements, the company records operating losses that amount to 50% or more of its equity.
If you need further information, please contact Mr. John Hidalgo, Director of AUDIT TAX CORPORATE (www.auditcorporate.com) via firstname.lastname@example.org
Written by Mr. John Hidalgo, Director of AUDIT TAX CORPORATE, a member firm of Allinial Global in Ecuador
CW’s Representatives in Colombia
asiaBconsulting is a consulting firm specialized in supporting companies, governments, institutions, and organizations interested in exploring, initiating, and consolidating commercial, educational, cultural, and investment relationships in Asia and Latin American countries. With more than thirteen years of experience in developing projects in India, Singapore, South Korea, mainland China, and Hong Kong.
asiaBconsulting is our representative agent in Latin America since 2005. Based in the city of Bogota – Colombia, the firm has a specialized team of professionals.
David Barriga, CEO
He is a specialist in Asia with more than 25 years of experience. David is an Industrial Engineer with a specialization in International Business. Recognized speaker on Asian subjects. He is also a member of several Boards of Directors of Asian Binational Chambers.
Languages: English, Spanish, and Mandarin
Angie Pinilla, Business Administrator
With over five years of experience, she is a consultant who has a solid knowledge of the business and management industries, with her valuable experience, now part of the CW Latin department, to support the Spanish speaking clients of CW CPA.
Laura Quevedo, Project Manager
She is an international business professional with years of experience in negotiation, project development, and digital marketing.
From the office in Bogota and with the support of our team in Hong Kong and mainland China, we want to assist our clients in all their administrative and accounting processes and matters related to accounting, talent mobility solutions, outsourcing, recruitment, among others.
What makes Colombian coffee most popular in the world?
Known to produce soft, well–balanced coffee beans, Colombia is the country of which annual coffee production (11.5 million sacks) ranks third globally, after Brazil and Vietnam. At the end of 2019, the value of harvesting coffee in Colombia reached 7.2 trillion pesos (US$2.2 billion), 15.8% more than the 6.2 trillion pesos (US$1.9 billion) of 2018, resources that directly boost the economy of the country’s more than 600 coffee municipalities.
By 2020, the production of Colombian coffee is estimated to reach 14 million sacks.
Colombia also produces the highest amount of Arabic grain, a world-renowned grain with a slight blueberry aroma that makes a wide range of flavors ranging from sweet to acidic. Other than the Arabic grain, Colombia produces superior coffee such as delicious Bourbon or Robusta.
Most coffee is grown in Colombia’s coffee axis region. In 2007, the European Union granted Colombian coffee the status of “Protected Designation of Origin“. In 2011, UNESCO declared the Coffee Cultural Landscape of Colombia as World Heritage Landscape for its “centennial tradition of coffee growing“, producing the world’s best coffee.
WHAT YOU NEED TO KNOW ABOUT COLOMBIA COFFEE
Colombia’s proximity to the Ecuadorian line puts it in a unique position to have two harvest seasons per year compared to the single harvest season in many world coffee regions. As a result, Colombia can deliver fresh coffee throughout the year.
Besides, the Colombian coffee grows on the region’s volcanic soil, which is full of nutrients and is considered the best for coffee cultivation. The coffee is produced at the height of around 4,000 – 6,000 feet (1,200 – 1,800 meters), resulting in coffee production with higher quality and more flavor of fruits and berries.
- Cultivation and harvesting
What distinguishes Colombian coffee is the process of harvesting. While other coffee-growing regions follow the mechanical harvesting method, which removes coffee from the branches simultaneously, in Colombia, almost all 600,000 coffee growers collect coffee beans by hand.
What makes the manual collection process so impactful? While a machine cannot differentiate between ripe, immature, and oversized grains, a coffee-picking person can.
COLOMBIAN COFFEE IN CHINA: A GREAT OPPORTUNITY
Even though China is traditionally a tea-drinking country, a growing coffee market has slowly emerged over the past two decades. When the first Starbucks opened in China in 1999, drinking coffee is a manifestation of better economic achievement. Nowadays, it has become a daily habit for the younger generations.
The coffee market in China has enormous potential, especially for instant coffee, capsule coffee, and coffee chains. According to Statista’s market forecast for coffee in China, the revenues in the coffee sector rises to US$11,653m by 2020.
Thanks to China’s growing influence of millennials, both foreign and domestic investors bet on establishing stronger market dominance by selling their coffee via coffee chains and online stores. What’s more, the entry requirements of importing and selling coffee to the Chinese market are relatively low. Needless to say, it is now the right time for Colombian coffee producers to investigate how the Chinese market can help grow their business.
Regulation and Compliance in Industrial Property in Mexico
Contributed by: Erika del Sol Rodríguez Razo
LawBiz Consulting Group, Mexico Member firm of Allinial Global
On 1 July 2020, the new Federal Law for the Protection of Industrial Property was published in Mexico, enacted on 5 November 2020. The new law empowers the Mexican Institute of Industrial Property (IMPI) to apply measures, resolutions, and sanctions through higher fines for intellectual property infringement. The penalties could even cause the bankruptcy of companies. Besides, the IMPI may collect resulting tax credits through the administrative enforcement procedure, in terms of the Federal Tax Code, and condemn payment of damages caused in the administrative declaration procedures. IMPI may also request assistance from the federal, state, or local public force, civil or armed institutions.
Without a doubt, the new law puts Mexico at the forefront of protecting industrial, intellectual property, and copyright, which is why every company in the Mexican territory or those with commercial relations in Mexico must implement measures to avoid risky situations using brands, software technology, licenses, or teleworking. And I emphasize “every company“ since, with the pandemic, it made it clear to us that it is the new way of operating, oriented to electronic commerce. We must be aware of the legal framework in which surveillance and pressure for illegal or suspicious uses will increase significantly.
Among the most notable contributions of this new law, we find:
- Electronic documents with an advanced electronic signature or other means of identification will produce the same effects as those signed autographically and will have the same probative value.
- The non-patentability of cloning procedures, genetic modification in animals or for the development of a human being,and the use of human embryos for industrial or commercial purposes is specified. However, the protection of biological material that has been modifiedthrough a technical procedure (virus) is given.
- The premise of the “Bolar Clause” is included so that a third party may use, manufacture, offer for sale or import a product with a current patent to generate tests, information,and experimental production to obtain health records of drugs in order to market them when the patent expires, from the filing of the patent application and throughout the term of its validity.
- Allow industrial designs in an animated sequence or in an animated graphical interface.
- Regarding industrial secrets,the new lawwill help clarify their objects and the scope of protection, as well as to facilitate their exercise and increase the risks for possible offenders. Fines for the misappropriation, use, or disclosure of industrial secrets are substantially increased. It also makes it easier to obtain compensation for damages for such misconduct and creates new procedural avenues to enforce rights to industrial secrets.
- The validity of trademarks, notices and trade names will be counted from the date of registration (concession). This provision will apply onlyconcerningtrademarks granted after 5 November 2020.
- The previous law established that geographical indications and appellations of origin could not be registered as trademarks. The new law establishes that not only identical signs will be challenged, but also signssimilar toa degree of confusion to geographical indications and appellations of origin.
- The definition of bad faith has been limited. Now bad faith is understood as “having requested the registration of a signto obtainan undue benefit or advantage to the detriment of its legitimate owner.” In addition, you can request the partial expiration of a brand, with respect to products that are not in use. The effects of expiration will be effective at the time of the final resolution.
- Regarding the digital environment, there is a series of coercivemeasures for expeditious implementation where companies that intensively use works protected by copyright or that are oriented to electronic commerce should be aware of the legal framework they will operate, in which surveillance and pressure for illegal or suspicious uses will increase significantly. The provisional measure is added to remove content on the internet or through virtual, digital,or electronic means, including those that may arise in the future.
The IMPI will have, among other powers: to impose provisional measures ex officio; destroy insured property; impose and collect fines, carry out a conciliation procedure regarding administrative infractions; and determine the payment of damages. Powers are granted for the IMPI to determine and impose damages for violations of a right. The possibility of closing an establishment is incorporated when the imposition of a provisional measure is not sufficient to avoid the violation of rights and definitive closure as a sanction for violation of property rights.
This new law is a challenge, which in itself represents an enormous complexity, as part of the package of reforms associated with the T-MEC, so that every company should do due diligence in industrial property and have an expert lawyer to advise the use that is making this information inside and outside the company.
Erika del Sol Rodríguez Razo
LawBiz Consulting Group, Mexico Member firm of Allinial Global
The Belt and Road Initiative (BRI) is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in nearly 70 countries and international organizations. The stated objectives are to construct a unified large market and utilize both the international and the domestic markets, to enhance mutual understanding and trust between member nations through cultural exchange and integration, which results in an innovative pattern with capital inflows, talent pool, and technology database.
This Belt and Road initiative has been presented in several Latin American countries, like Peru, Venezuela, Ecuador, and Argentina. Recently, China decided to explore new areas of cooperation, namely the Health Silk Road (HSR) and the Digital Silk Road (DSR) – both have developed immensely since the beginning of the pandemic.
The HSR has been developed due to the necessity of modernizing and finding new solutions in the health industry amid the pandemic. The Chinese government is providing medical aid and food supplies, which was delivered directly to countries like Brazil, Colombia, and Spain by the Chinese embassies there. Some companies that take part in BRI projects abroad, for example Huawei and China Communications Construction Company, have taken the initiative to deliver supplies. The Jack Ma Foundation and Alibaba Foundation have delivered relief packages to more than 150 countries. China has also been lending economic support to some afflicted countries. With all these efforts, China is striving for one of the main roles in the fight against COVID-19.
To accomplish its objectives for the DSR, China has invested over US$7 billion in loans and foreign direct investment for fiber-optic cable and telecommunication network projects. These investments have transformed connectivity in many countries across the planet, from Latin America to Central Asia to the Pacific.
Chinese companies that are already well established throughout the BRI, such as Huawei, Alibaba, and Tencent, have specific and concrete plans to expand in Latin America since the area is needy in terms of technological infrastructure.
5G technology presents a big leap in terms of development for Latin America. Two of the five companies in the world offering 5G systems are from China – ZTE, and Huawei. The latter has expanded across the region in recent years.
It is possible to see a trend not only for Latin American, but for companies worldwide to import Chinese solutions for both medical and technological aspects and to implement them in their countries. Chinese medical equipment, telecommunication and digital solutions are presented everywhere.
We can clearly see that the pandemic forces China to rethink its Belt and Road Initiative and ways for better improvement. Until now, we have seen remarkable results with several partnerships being formed as well as excellent improvement in health and technological sectors in Latin America.
Written by Rafael Fraga, Latin Department, CW CPA
Marant Caballero – CW’s recently relocated Mexican advisor in Shanghai
Before joining the Latin Department team, Marant Caballero studied at Fudan University in Shanghai, from which he obtained a business certificate in international business. After his graduation, he moved to Shenzhen, where he worked in the retail division of a large e-commerce company, focusing on Spanish-speaking markets (Latin America and Spain) and developed different sales and marketing strategies through social media. As a native Spanish speaker from Mexico, Marant Caballero joined CW team in 2017 in our Shenzhen office as Latin Department business advisor and focused on marketing and sales.
After joining our Latin Department, Marant has guided several Latin American clients through their market entry process into Greater China, from pre-entry assessment to corporate establishment, and ongoing support working closely our tax, accounting and payroll professionals.
With CW’s Shanghai office recently relocated, Marant has made the decision to represent our Latin Department in Shanghai in order to deepen CW’s commercial activities in the Yangtze River Delta, one of the most developed business clusters in China. CW’s Shanghai office now consists of a team of accounting and payroll consultants serving a handful of international clients headquartered in Latin America, United States, France, United Kingdom etc. Marant is excited to join our Shanghai team and plans to fully exercise his marketing expertise to help CW gain a stronger foothold in Shanghai.
If you wish to seek for cooperation with our Shanghai team, please do not hesitate to contact Marant Caballero at the following email: email@example.com.
Written by Marant Caballero, Latin Department, CW CPA