The November issue of China Business Law Journal has a truly international feel about it. In Leap of faith we explore the trends of foreign direct investment (FDI) into China. As we all know, the Shanghai Free Trade Zone exudes so much promise for foreign investment, and yet the nitty-gritty of how this zone will work is still far from clear. To some degree, this observation mirrors FDI in China. There are ample rewards for those who persevere, familiarise with regulatory considerations at all levels, and obtain expert legal advice on the numerous inconsistencies, duplications and information gaps that permeate business law.
There are also reasons to beware. China’s growing lack of tolerance of monopolistic behaviour and commercial bribery has been witnessed in several recent significant cases, most of which appear aimed directly at foreign investors. Whether it be the possibility of class actions via changes to the Civil Procedure Law, tax liabilities you may not be aware of, or state secrets you may have unwittingly exposed, this article is a must read for covering your bases – before you take that leap of faith.
With the shoe firmly on the other foot, Here be dragons analyses some of the trends for Chinese investors seeking acquisitions abroad. Despite signs of a slowdown, outbound M&A is alive and flourishing. As one might expect, energy and commodities top the list for M&A activity, but privately owned Chinese companies are now sharing the stage with the big state-owned enterprises in major deals. And both classes of investor are involved in larger and more sophisticated deals in developed markets across a range of non-traditional sectors.
But beware. As the old maps used to declare on seas of uncertainty: Here be dragons! With the scrutiny that follows Chinese investment, local knowledge in navigating successfully through a US review, as well as local regulations that discourage foreign ownership, are essential for the outbound explorer. Regulations in the UK are about to get tougher, and the UK has had two new financial services regulators to deal with. Russia is a growth market, but political risk is still a factor, as is the case with a number of African destinations catching the eye of Chinese enterprises. We have all the hot spots and the best advice for avoiding those dragons.
As Edward Snowden pokes his tongue at the US with impunity over allegations of widespread hacking, we thought it was time to take a global issue personal for law firms and counsel. How safe are your systems? Watch IT! offers advice from a professional in the field on whether your firm or legal department is safe from prying eyes. This article cuts through the tech jargon for some sound advice on keeping your secrets safe and your clients’ data protected.
Finally, a word for our Dispute Digest section and some interesting and wide-ranging articles this month, not the least from Lord Goldsmith QC, former UK attorney general and renowned in the field of dispute resolution. Lord Goldsmith makes his case for China opening up to international arbitration institutions.