China has introduced some star-quality reforms to shoot its economy back to goal winning form, writes Richard Li
China’s development is being challenged by a complicated and severe international environment. As a whole, the domestic economy has maintained healthy growth in the past few months (although the recent figure of 6.2% in the second quarter is the weakest in 27 years, according to China’s National Bureau of Statistics and tradingeconomics.com). Still, the central government has maintained its composure, and by gradually rolling out reform measures to attract foreign investment and encourage technological innovation in the capital market, it has injected a sense of optimism.
However, as the economy comes under pressure, market players are being confronted with new challenges. The biggest of these is undoubtedly the trade war with the US, which is affecting foreign investment into China.
Milton Cheng, managing partner of Baker McKenzie’s Hong Kong office, says, “The protracted trade conflicts are also keeping our international commercial and trade practice very busy as companies rework their supply chains to keep themselves out of the line of fire.”
Still, the Chinese market remains hugely attractive for foreign investment. Eric Liu, a partner at Linklaters Zhao Sheng in Beijing, says that market has been undergoing an opening-up process, but the trend is intensifying. “For example, just some time ago, the government issued a new negative list for foreign investment in China, and many international investors are paying close attention to this trend of opening up,” he says.
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More Insight
There are many new types of disputes in the market that pose challenges, but also bring opportunities. One challenge is that we cannot simply use past rules and mindsets to tackle these disputes. One opportunity is that if these disputes are resolved smoothly, we will be setting standardized rules for the industry. Resolving conflicts is not only about tackling disputes or individual cases but more about explaining and defining the rules of commerce.
Chen Fuyong
Deputy Secretary-General, BAC/BIAC
Japanese companies generally attach great importance to compliance issues in China, especially in the anti-corruption and antitrust areas. Contract review, staff training and precaution against commercial legal risks are the main drivers of our business in recent years. The compliance business is showing a trend of expanding into more fields, from the initial field of commercial bribery gradually to monopoly agreements on pricing, IP, and personal information protection.
Zhang Hefu
Partner, East & Concord Partners, Beijing
At present, the new concept of “Labour Law+” means that labour lawyers should improve and expand their own services as the businesses become more complicated. For example, labour disputes related to executives involve not only the Labour Law, but also the Company Law, while employee frauds and duty-related misappropriations may even involve the Criminal Law. In terms of compliance review, after the EU’s General Data Protection Regulation came into force, related companies have needed to know how to gather and process employee data.
Qi Bin
Partner, Xin Bai Law Firm, Shanghai
It is worth noting that applications of blockchain have shifted from cryptocurrency usages such as ICOs [initial coin offerings] to more practical scenarios such as evidence storage and transfers of account receivables. This is mainly because blockchain technology is becoming increasingly well developed and market players are adopting a more rational and practical development approach.
Wu Weiming
Senior Partner, AllBright Law Offices, Shanghai
Recently, laws and regulations regarding employment discrimination and personal information protection are being introduced gradually. In daily consulting, clients focus more on how to avoid employment discrimination in recruitment, how to protect personal information of employees, and how far such protection should go.
Qu Xiaorong
Vice Director and Senior Partner
River Delta Law Firm, Shanghai
We have seen an upsurge in activity relating to credit and debt transactions. With the ongoing uncertainties in the market and valuations coming down, many clients have geared their business to sectors such as debt investments and, to the extent possible, plan to restructure their equity deals. [Such restructurings] can often involve complex renegotiations.
Lorna Chen
Head of Greater China
Shearman & Sterling, Hong Kong
This year marks the 30th anniversary of The Administrative Litigation Law. After 30 years of development, administrative litigation has become a major channel for resolving disputes between administrative agencies and businesses. I think in the next few years, the high-end legal services market will see an important trend of fusion of public and private laws. Similar to China, the US, Canada, France, Germany and other countries all adopt a tough regulatory stance. It is impossible that companies in these countries do not interact with the government.
Cao Zhuping
Senior Partner
Hui Ye Law Firm, Shanghai
Cases of trademark searches and analyses, as well as trademark invalidity proceedings, are increasing. Based on our understanding, the main reasons are: (1) as the volume of trademark applications reaches a high level, many patentees are considering ways to exercise their rights; and (2) as China is enhancing the protection of intellectual property, many patentees have developed a greater awareness of their rights.
In the meantime, many companies are counterparts to others’ rights. The increasing prudence of these companies in business operations has resulted in the rapid growth of businesses related to FTO (freedom to operate) searches and invalidity searches.
Dang Xiaolin
General Manager and Partner
Sanyou Intellectual Property Agency, Beijing
The inauguration of the Star Market has pushed the regulation of the overall capital market to become more marketized, which is a core change during China’s capital market transition from an approval-based to a registration-based IPO system.
The Star Market should be the first choice for many companies intending to go public in China. But because of the development of China’s Pearl River Delta Greater Bay Area project, if the favourable policies of the Star Market can be extended to the ChiNext Board of the Shenzhen Stock Exchange (SZSE), the latter may attract substantial investment again. Shenzhen is a highly marketized city, with many small and micro businesses listed on the SZSE. Staff of the SZSE have accumulated abundant experience in communicating with this type of businesses.
Chen Zhongye
Managing Partner
Guantao Law Firm, Beijing
The advancement of China’s internet industry has led to the development of new businesses in the internet sector, including information protection, privacy protection, data security, anti-unfair competition, antitrust, internet payment and financial security.
Zhan Hao
Managing Partner
AnJie Law Firm, Beijing
India has a very complicated legal system, with many archaic British laws still in use. In addition, Indian courts do not specify time limits for case hearings. Therefore, many companies that put heavy emphasis on efficiencies try to avoid being involved in lawsuits in India. Many Chinese entrepreneurs with investments in India also have limited understanding, or even misunderstandings, about Indian laws relevant to establishing companies.
For example, some local lawyers will intentionally or unintentionally mislead Chinese clients into believing that Chinese companies cannot set up wholly owned subsidiaries in India, and that they can only set up joint ventures with at least one Indian director. Once a Chinese company sets up a subsidiary in India based on such information, the controlling right of such subsidiary may be at risk in the future.
Gao Qiang
Senior Partner
Landing Law Offices, Shanghai
Under tight regulation, asset securitization is drawing increasing attention in the market. Compared with traditional financial instruments, asset securitization is not bound by the limits of traditional market players, and is able to achieve financial transformation at the asset level. It is a more nuanced, diverse and in-depth financial instrument.
Ma Chenguang
Managing Partner
Co-effort Law Firm, Shanghai
