Tango in the dark

Despite political tension and cultural misunderstanding, Chinese investment in Latin America is moving beyond natural resources and up the value chain

By Alfred Romann

As far as deals go, this one was high voltage. In December last year, the State Grid Corporation of China paid US$1.8 billion for 3,200 kilometres of power transmission lines in Brazil. It was a big step for the largest electricity utility company in the world and a big deal for the many lawyers involved. It was also complex.

State Grid bought seven Brazilian electricity distribution companies from a consortium of Spanish operators. Uría Menéndez, a Spanish law firm with offices in Beijing and Latin America, worked on the deal that had, by the time of the announcement, been in the works for almost eight months.

The deal had been reached in principle almost a year earlier but plenty of negotiating on the terms needed to be done. It was during this process that contrasts in approach surfaced between the fiery Spanish and Latin American players on the one hand and their calmer Chinese counterparts, who rarely made independent decisions, on the other. There was also a language barrier, even though everybody spoke English.