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Expanding markets : a comparative analysis of the Brazilian and Chinese legal framework on foreign enterprises

English Abstract

Foreign investment is currently an important and active factor of global economy. In this scenario, Brazil and China are two massive players, constantly figuring in the top 5 of the largest receivers of direct foreign investment throughout out the recent years. In addition, the bilateral economic relations of the two countries is strong with China being Brazil’s main trading partner, while Brazil is the largest economic partner of China in the South American continent, with several companies from one country investing in the other. In the economic sphere, law is an instrument that governments have to administrate a certain sector, fostering or reducing the conditions for a proper business environment. Therefore, this work studies the legal framework of Brazil and the People’s Republic of China for foreign investment, namely in the field of Company law concerning the establishment and operation of foreign companies or enterprises formed with foreign capital. The two countries make use of diverse legal tools on their approach to foreign companies. Brazil applies a domestic principle allowing for the possibility of foreign investors to become shareholders and establish companies that will be a domestic enterprise, facing the same requisites and characteristics of a domestic Brazilian venture, with the most used modalities of companies being the limited liability company and the joint stock corporation. There is also the possibility of alien companies to establish a branch or representative office in the nation, which will then be regulated by specific laws for foreign investors. On the Asian side of this research, China offers a vast web of specific regulations, each one defining a particular modality available for foreign investors. Those investment vehicles are: the opening of a Branch Company; forming a Joint Venture with a Chinese Counterpart, which can be an Equity Joint Venture or a Cooperative Joint Venture; starting a Wholly Foreign Owned Enterprise; Incorporating a Foreign Invested Company Limited by Shares and lastly establishing a standardized company using the Chinese Company Law. Comparing the both nations legal system results on the conclusion that China is largely more prepared and more legally structured for foreign investment than Brazil, this is accomplished by making a more effective use of its laws and providing official English versions vi of its main economic legal instruments. Brazil is not on a great disadvantage, once companies are treated equally as domestic enterprises and the registration procedures are simpler than in China. Lastly, a factor that both nations could develop more in their legal framework is the large bureaucracy involved in the procedures of establishing a company.

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Castilhos, Guilherme Vargas


Faculty of Law




Investments, Foreign -- Brazil

Corporations, Foreign -- Brazil

International business enterprises -- China

China -- Foreign economic relations -- Brazil

Brazil -- Foreign economic relations -- China



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