This issue of China Business Law Journal includes our annual review of China’s legal services market and key legal issues in the past 12 months. This year the review will include a series of five features, each with a different perspective.
Grand design focuses on the Guangdong-Hong Kong-Macau Greater Bay Area (GBA), which China has envisaged as a new world-class city cluster that features economic prosperity and technological innovation. The ambitious plan will certainly bring many opportunities for investors and law firms. However, the GBA is also bound to face challenges since it is unprecedented in nature – connecting three jurisdictions under one nation. The success of the GBA lies in the integration of people, capital and goods, and the effective flow of such elements lies in the wise design of ways to connect the different legal and economic systems.
But China’s development, in general, is being challenged by a complicated and severe global environment. The gameplan points out that the biggest challenge is the trade war with the US, which is not only affecting foreign investment into China but also Chinese investment into overseas countries.
The US has enhanced the power of its Committee on Foreign Investment (CFIUS), and some major European countries have followed the US practice. The increasing difficulties in investing in the US and Europe have driven Chinese funds to other regions such as countries along the Belt and Road.
Domestically, China has deployed reforms to keep up its economic development. The most important one is perhaps the launch of the Sci-Tech Innovation Board (The Star Market) in Shanghai. The thresholds for listing on the new board have been lowered so that it opens new capital-raising channels for tech startups. In the meantime, Chinese authorities have also stepped up regulation on complicated financial products, monopolistic behaviour, personal data use, intellectual property infringement, etc.
Given tightened regulation, compliance has become an enormous concern of many companies. For Corporate voices, we interviewed corporate counsel and executives from different sectors to understand what kinds of opportunities and challenges are facing companies in China’s current regulatory and market environments. Apart from private companies, the legal teams of state-owned enterprises (SOE) also attach high importance to compliance. A new SOE-ra investigates the legal risks and pitfalls that SOEs may encounter when they invest overseas, such as the EU’s General Data Protection Regulation and US trade restrictions and prohibitions.
Metamorphosis focuses on the development strategies of law firms. The highly competitive legal services market is forcing different law firms to think about how they will survive. Some firms choose to expand and provide one-stop services across practice areas and regions. Some are mindful of their size and choose to dig deep into one or only a few areas. Each choice has its reasons, and its validity will be tested by market competition.