Interview with Bernardo Mendia, Secretary-General of the Portugal-China Chamber of Commerce

It was Chinese companies “that valued national companies the most, in the face of the risk of national bankruptcy between 2010 and 2015, with values 40% above market, having invested in the country when we needed it most,” Bernardo Mendia, Secretary-General of the Portugal-China Chamber of Commerce comments to the blog Estado com Arte.

“It is clear that it is not in our interest to live without foreign direct investment, as has happened historically with some countries that have isolated themselves and whose effects are known,” says the head of the Portugal-China Chamber of Commerce about António Costa’s recent statements to the newspaper Público that “we can live without Chinese investment.”

Bernardo Mendia knows well the business environment of Hong Kong where he has been twice in 2023, in his view it is a city “very resilient, extremely favorable to business, with a very stable and low tax policy, transparent in administrative procedures and with very dynamic talent attraction and business incentive policies.”

How do you see Chinese investment in Portugal?

Chinese investment in Portugal is mainly concentrated in the years 2010 to 2015, following the deep financial crisis that was experienced in the country and that almost led us to bankruptcy. At the time, the country turned to the International Monetary Fund, the European Commission and the European Central Bank, which granted a loan that allowed Portugal to honor its international commitments and escape a scenario similar to the one in Greece. In exchange, these creditors determined several conditions to guarantee the return of the loan, including the privatization of several national companies. As a result, Portugal went to the international markets in search of foreign direct investment (FDI), namely to sell the share capital of these national companies. By happy coincidence, the Chinese authorities were precisely going through a period of encouraging their companies to invest outside the country and grow internationally. On the other hand, the perceived risk of Portugal in Europe and the United States did not allow companies from those countries to be willing to go beyond market values. Despite the effective risk of national bankruptcy, it was the Chinese companies that valued the national companies the most, namely with values 40% above market value, having invested in the country when we needed them the most. Since then, the investment and circumstances have changed a lot, both on the Portuguese and Chinese side. Even so, Portugal continues to be a country that needs and competes internationally with other countries for FDI, from all origins and without discriminating against the country.

Is there an excess of this investment from China?

It is not expected that Portugal will have an excess of FDI from China, or from any other country. The challenge lies in presenting ourselves to the competition, from other countries, with stronger arguments, namely a stable fiscal policy, transparent administrative processes and sufficient qualified human resources.

Data from the Bank of Portugal, referring to 2022, show that China maintains its status as the fifth largest investor in the Portuguese economy. In a recent interview to Público, the Prime Minister said that “we can live” without Chinese investment. Do you agree?

We can live without any foreign investment, with the difference that we will be a lot poorer. In other words, it is evident that it is not in our interest to live without FDI, as happened historically with some countries that isolated themselves and whose effects are well known. What we are interested in is getting the great powers to compete among themselves to invest in Portugal, in order to increase the value of our assets. Today we are no longer looking to sell companies, but to get investments in the creation of factories, new industries, research and development of products, rehabilitation of cities, development of tourism capacity.

How is China’s support for Russia, on the issue of the Ukraine War, impacting the commercial relations between Portugal and China?

The effects are not commercial, that is, it has not affected the relations of purchases and sales of goods or services between the two countries.

Has Hong Kong already returned to the business dynamics of the pre-pandemic times?

Yes, Hong Kong opened a few months before China, which would not open until the second week of January 2023. It would therefore take a bit of a head start. Still, there is a way to go before Hong Kong returns to the normality of the second decade of the 21st century. However, HK is very resilient, extremely business-friendly, with a very stable and low tax policy, transparent in administrative procedures, and with very dynamic talent attraction and business incentive policies. These are factors that, together with the proximity to mainland China, make HK’s return inevitable and only a matter of time. In addition, during the entire period of pandemic limitations, HK developed infrastructure that makes the city even more competitive, including a new runway at the airport, doubling of cargo capacity, a new district dedicated to art and culture, a new multipurpose stadium, new access to mainland China, all while the city was literally closed. I had the opportunity to have been in HK already twice in 2023 and again in the previous two years, so all of this I have visited and verified personally.

Has the war in Ukraine and inflation affected exports to Macau and China?

Indeed, as I mentioned regarding China, there has been no change in trade relations with Macau either.

Source: Estado de Arte