Linking Up: Linklaters’ joint operations partner Zhao Sheng opens Bejing branch
June 26, 2019
3 min read
What's going on here?
The Chinese government has allowed the Chinese law firm Zhao Sheng (who in April 2018 formed a Shanghai free trade zone joint operation with Linklaters) to open a second office in Beijing.
What does this mean?
The opening of a second office is yet another sign of faith in the development of the Chinese legal market by the Magic Circle law firm Linklaters. It also is a testament to the success of their joint operations partner firm Zhao Sheng. Linklaters has been vocal on its belief that the Chinese legal market is the site of big new growth. In March 2018 they estimated China’s outbound investment over the next decade could be worth up to $2.5 trillion.
Recently in March 2019, due to new Chinese Foreign Investment laws, they projected inbound investment over the coming decade to be worth around $1.5 trillion. The move will allow Zhao Sheng and Linklaters to be closer to key financial regulators and to open new practice areas as well as strengthen old practice areas (such as both firms’ strong focus on Competition). The six-lawyer Beijing branch will be headed by Zhao Sheng’s Managing Partner Eric Liu.
What's the big picture effect?
Linklaters’ faith in China does not stem from nothing. Their joint operations partner firm, Zhao Sheng, boasts strong client relationships with their clients including COSCO, UBS and China Development Bank. Considering that the Chinese legal market is only around 40 years old, developing strong and long-lasting client relationships is an area on which Chinese firms are looking to improve. Linklaters’ established status and innovative legal services are the perfect match to thrive on what Li Steven Wang, Head of the Corporate Segment for Asia & Emerging Markets at Thomson Reuters, describes as a legal market that “is evolving rapidly”. Making inroads into Beijing will bring the duo closer to clients and regulators whilst broadening their own legal offering into new sectors.
Linklaters has worked on some truly cutting-edge cases in China. Linklaters advised on the establishment of the China-Hong Kong Bond Connect and Stock Connect programmes that allow mutual market access between China and Hong Kong. This land mark deal has significantly helped China open up to foreign investment. Since partnering with Zhao Sheng in 2018, the Magic Circle law firm has advised on the first batch of Perpetual Bonds offerings and the Bank of China’s multi-currency and multi-jurisdictional jumbo bond offering to raise money for the Road and Belt scheme. This is the primarily the result of the Road and Belt scheme and China’s new Foreign Investment laws that are driving growth in these sectors. The combination of very technical and cutting-edge legal work combined with a developing legal market is making China very attractive to law firms.
But the more attractive the offering, the more competitive this youthful legal market becomes. Linklaters and Zhao Sheng is the fifth joint operation in the Shanghai FTZ, following Baker McKenzie and FenXun Partners, HFW and Wintell & Co, Hogan Lovells and Fidelity Law Firm, and Guantao Law Firm and Ashurst. Further, Chinese law firms pricing is competitive: alternative fee arrangements are the norm. With US-China economic tensions and an increasingly competitive legal market, there are still doubts about whether Chinese long-term growth will be as great as it has been predicted.
So, will Linklaters continue thrive in this competitive emerging market?
Report written by Will H
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