You may notice, if you are browsing the print version of the July/August 2013 issue of China Business Law Journal, that our journal appears to be putting on weight! And so it is, for the considerable success of the second China Business Law Directory issue has our normally svelte but informative journal looking decidedly chunky. The China Business Law Directory has proven highly successful as a handy reference guide for corporate counsel and China business leaders to locate quality legal advisers for China-related work. Our thanks to all who made it such a success!
So, we’re feeling a little overweight, and as any top athlete will tell you, you have to be in peak physical shape to get the most out of your body and achieve your optimum performance. The same applies with competing in the legal community. With so many developments, the timing was right to check the pulse of China’s legal markets, and give our diagnosis as to the opportunities and challenges that lie ahead. Healthy at heart, the annual Directory Review accompanying China Business Law Directory, notes a number of symptoms including slowing economic growth, greater interest in internationalisation and more direct competition with foreign firms.
Regulatory enforcement in areas such as antitrust is tightening, compliance is more crucial, and clients are demanding more from firms as competition intensifies. And the competition in the legal services market is not just about contending for Chinese clients, but for international clients, too. Not only did we find competition between Chinese and international firms, but also among the Chinese firms, and among the international firms as well.
This growing competition was something interestingly borne out in the lead story of our News section, which is about the number of foreign firms setting up recently in Beijing and Shanghai. This tide of interest shows no sign of waning. Slower growth has done nothing to dampen foreign investment but the focus has shifted to value-added sectors such as TMT (technology, media and telecoms). All in all, the nation’s legal markets are showing signs of healthy growth.
In Conjuring success, we look at what is needed to maintain foreign interest in M&A in China. As the nation’s middle class continues to evolve, investors are focusing on areas such as ready consumables to capitalise. But the challenge for foreign investors is, as always, regulation that stacks the cards against them, in everything from approvals to IP protection.
And it’s not just Chinese regulation. Foreign investors are doing more due diligence on Chinese target companies in order to satisfy compliance requirements of the US Foreign Corrupt Practices Act, which is creating tensions on the Chinese side of deals. Some of the sectors earmarked for opportunity include healthcare, education, telecoms, the movie industry, e-commerce and real estate. Stumbling blocks include VIE (variable interest entity) structures, foreign ownership laws in areas like construction and cinemas, and updates to labour and employment laws.