China 2008

It has often been said that Guangzhou, the third-most-active commercial centre in China, is overshadowed by Beijing and Shanghai as a legal centre. In addition, it has had to contend with strong competition from firms in neighbouring Shenzhen.

However, an increasing number of local firms are adopting strategies to further develop their practices. Also, they are looking beyond their local area to the possibilities of international practice.

 

The optimism of Guangzhou lawyers is well founded, as seen in the continuing growth of the Canton Fair (the Chinese Import and Export Commodities Fair). This is the largest trade fair in China and, in the spring of 2007, the 101st fair saw the participation of 314 different companies from 36 countries.

 

While Shanghai is busy upgrading its city infrastructure for the 2010 World Expo, Guangzhou, to be the host city of the 16th Asian Games in 2010, is spending approximately US$26.5bn to improve its infrastructure, build an athletes’ village and a new railway station, and complete the second phase of the new Baiyun International Airport. As the projects progress, law firms whose practices include project finance, construction and real estate are benefiting from the influx of work.

 

And the most exciting development is yet to come. The Guangzhou government is changing the basic operations of the city’s foreign investment intakes and its economic development. The 2007 Guangzhou Foreign Trade White Paper sets out the changeover: from a labour-driven economic growth to one that is based on technological developments. Investment in the automotive, petrochemical and electronic information industries will be encouraged. These fundamental changes will create opportunities for business law firms targeting the mid to high end of the value chain.

 

“Compared to firms in Beijing and Shanghai, Guangzhou firms have fewer opportunities to develop a sophisticated cross-border transaction practice,” Sino-West Law Associates’ managing partner Gordon Lin says. “However, it is relatively easy for a firm to succeed in Guangzhou, as long as it is able to do its best with the opportunities that are present.”

 

With location advantages, Guangzhou firms can slice through the competition in the greater Pearl River Delta region (PRD). “If a deal doesn’t require central government’s approval, clients in the PRD region most likely will hire a local firm from the provincial capital city to be their legal advisor,” says Lin.

 

Guangda Law Firm, winner of “Guangdong Law Firm of the year” at the ALB China Law Awards in 2007 and 2008, had a record year with revenue growth of 30% in 2007.

 

When asked about plans for the future, Pete Zhang, the executive partner of Guangda, says the firm will retain its primary focus on Guangdong province, because it has seen the immense potential outside the traditional litigation work. “There is no doubt at all that lawyers’ role in litigation has been well established and understood by people in Guangzhou,” says Zhang.

 

“The function of lawyers in corporate and investment areas, however, is only being gradually understood and accepted by local entrepreneurs and by the government,” he continues. “It will take some time for the idea of using lawyers for non-contentious matters to reach the same level as it is now in Beijing, Shanghai and the Yangtze River Delta. But that’s exactly what we should focus on, because it will be the main driver of our firm’s future growth. Guangdong’s economy is strong enough to foster a much larger and deeper legal services market.”

 

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