China 2008

 

In 2007, the PRC banking industry experienced much reform and restructuring, and became more open to foreign investors. Many Shanghai firms have built on their relationships with domestic and international banking clients, and have followed closely the development of business in traditional and emerging product lines.

 

Jun He Law Offices’ Shanghai office has reinforced its leadership in the banking sector by representing major banks in financing transactions totalling more than

US$30bn, including acquisition finance, project finance, structured finance, asset finance and trade finance transactions.

 

“Jun He’s Shanghai office has achieved another banner year, especially in the banking area. Although tight monetary policy will continue in 2008, the pipeline of lending and financing deals will remain strong,” says George Wang, partner with Jun He.

 

As more foreign banks become locally incorporated, their demand for PRC legal services will continue to grow. “All the new laws, particularly the new property law and bankruptcy law, will have a significant influence on both international and local financial institutions,” says Charles Qin, founding partner of banking and finance boutique firm Llinks Law Offices. “Increasingly, they will need local counsel to advise them on regulatory and compliance reviews, and on their consultation with the government authorities on general and specific issues.”

 

Another trend witnessed by finance specialists is the rise of the funds management industry in Shanghai. In recent years, Jun He and Llinks have advised foreign and local banks and insurance companies on establishing joint venture and domestic funds management companies (FMCs), and have acted on FMC investments at home and overseas.

 

“With more QDII and QFII licences being approved and the investment quota expanding, the funds management industry is a fast-emerging and cutting edge practice area for Shanghai firms,” says Qin. “The amended Partnership Enterprise Law allows fund managers to adopt a more flexible investment structure and helps the industry to grow in strength and sophistication.”

 

Currently, there are 60 FMCs, half of which are joint ventures with foreign financial institutions. Twenty have secured their QDII qualifications. Shanghai Yuan Tai’s funds practice has a particular focus on QDII. The firm enjoys a large share of the market. It has advised China Southern Fund and ICBC-Credit Suisse AMC on their first QDII product launches and is currently advising 10 other leading domestic and joint venture FMCs on their QDII applications.

 

“Despite the volatility in the world market, the pace of growth of QDII funds will not be hampered. The QDII scheme is the government’s long-term investment strategy, so there will be more opportunities for dedicated funds management law firms to participate in this visionary outbound investment program,” says Hubert Tse, managing director of Yuan Tai and head of the firm’s international business group.

 

In addition, the three sovereign wealth funds (SWFs) – China Investment

Corporation, National Social Security Fund and China-Africa Development Fund

– are reportedly planning to outsource a combined US$320bn to foreign asset managers over the next three years, according to a report by Z-Ben Advisors, experts on China’s investment management industry. Law firms in Shanghai are well placed to represent international and local fund managers in the outsourcing process.

 

The symbolic Jin Mao Tower in Pudong financial district will soon be eclipsed by a new building nearby – the Shanghai World Financial Centre. The 101-storey, 492 metre-high building will be the tallest building in Asia and a new symbol of Shanghai’s rise to prominence as Asia’s international financial centre.

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