The continued push into Asia by French law firms was evident last month when French independent Bignon Lebray & Associés announced the firm would open its doors in Shanghai, after recruiting China-based partner Bruno Lefébure from Haarmann Hemmelrath.
Lefébure, who is to relocate back to France, has been charged with servicing the firm's French clients that are looking increasingly toward China as an investment destination, as well as the growing number of Chinese companies injecting capital into Europe. Bignon's Aix-en-Provence-based partner François Perruchot Triboulet will be responsible for setting up shop in Shanghai, in collaboration with the firm's Chinese partner, Beacon Law Firm.

Bignon can expect to find a very competitive market in China. The Asian region, with the addition of Bignon, now has 10 French firms vying for business, largely from French clients, with many having been resident in Asia for over 15 years.

Perhaps the only truly "international" firm among them is Gide Loyrette Nouel, which has long been established in both China and Vietnam, and in May chose to expand its presence in the region when it opened a Hong Kong office. Though it has grown to claim international status, 60% of its client base is still of French origin.
The other well-established French firms in the region - which include the likes of DS Avocats, Adamas, Vovan & Associés and CMS Bureau Francis Lefebvre - have spread across Asia to establish offices in Japan, China, Vietnam, Thailand and Taiwan, and are even more focused on their French client base, making for tough competition.

But perhaps there is enough work to go around, particularly in China. Sino-French trade reached US$20.7bn last year, an increase of 17.3% on 2004, while French exports to China were valued at US$9bn, an increase of 17%.  In addition, French companies had invested in 3,017 projects in China worth US$7.6bn by March of this year. France has also become China's second largest technology partner, third largest source of investment, and fourth largest trade partner among EU members.

Increasing opportunity has made Asia a hot topic in France, especially when the talk is of China, the obvious Asian growth story, and India, seen as the next growth market.

However, as is the case with all the established French firms in Asia, Bignon will have to contend with competition from the rush of international firms beefing up their China presence, and the impending rise of Chinese firms likely to set up French desks.

To be or not to be ... international
Bignon, somewhat predictably, is marketing its Shanghai office opening as the beginning of a new global strategy to develop the firm into an "international" entity.

In doing so, it follows in the footsteps of other French firms that have made their way to Asia, and have seen the marketing value for their clients in France of having an Asian office.

Some French firms, however, are having their hands forced. Those who want to compete at home in France for high-level investment and corporate work fear if they do not gain a foothold in Asia, they may begin to lose clients that move into the region, if these clients find they can gain better service from the already established French firms.

In reality, these usually smaller French firms - up against the financial powerhouses of the UK and American internationals that are now investing heavily in building their Asian practices - they will be unable to compete as truly "international".

They may, however, just be able to retain their clients by making the move, if they can overcome the competition and cultural challenges they face.

Adamas' Shanghai-based managing partner Olivier Dubuis says the arrival of yet more French firms in China and Asia is puzzling. "I am sure these law firms have a good strategy about what they want to do, but I fail to understand it," Dubuis says.

"We are not one of the main investors in China - we have French companies, and a good presence, but the fact that new firms are coming in is quite strange to me."

Dubuis says such firms would be better off building alliances with established firms in the region, rather than making the bold move of opening an office themselves.

However, he says, most firms are understandably focused on client retention back home in France. "Most firms are playing a card which is not really to compete on an international level, but is focused more on maintaining their own clients," he says.

Gide Loyrette Nouel Beijing-based partner Stephane Vernay says any new firms that open their doors in Asia will face a raft of challenges. "Entering into the Asian market is very difficult," Vernay says. "We opened back in 1994, and it was a long, long process - any newcomers will have to go back to this long process. You have to learn the law, the language, make the contacts - you can't become an expert in China in one day," he says.

Of course, there are still many French firms that have not seen the need to open in Asia. These include all of the Big Four firms (the ex-legal arms of the Big Four global accountancy firms), namely Fidal, Landwell & Associés, Ernst & Young Société d'Avocats and Taj.

However, when contacted by ALB, Fidal, the biggest firm in France, flagged that it was looking seriously at making the move into Asia.

"Fidal considers establishing an Asian presence in the future," says Jean-Louis Paul, chairman of the firm's directorate.
"The date is not still definitely decided, but Fidal does intend, alone or in partnership with another European cabinet, to establish in Shanghai."
Fidal, as with most other major firms in France, has not been ignoring the growth of Asia. The firm presently works with another firm located in Shanghai, so opening there would be a natural fit. Also, two years ago, Fidal created a Chinese desk of seven lawyers to service the growing two-way flow of investment between France and China.

The movement into Asia by some of the bigger firms in France could really cause a shake-out. However, as these firms are likely to focus mainly on opportunities in China, other markets are likely to be left alone - at least for a while.
French firms already in China all know that the growth in competition that will come in the near future will be from the maturation of Chinese firms, which are likely to become increasingly international and set up French desks.

"The main competition that we will be facing is the Chinese law firms," Vernay says. "They are more organised, more experienced. Now you really have to be Chinese in China and set up a Chinese team, as the legal culture is very different."

Chinese law firm King & Wood presently has French-speaking lawyers, as well as practitioners with other European languages, but does not have a formal French practice group.

The firm says it has no current plan to set up a French desk, but this would be put under "frequent review" to meet client needs as its practice evolves.

Of course, the international firms cannot be ignored. Gide's Vietnam-based Nicolas Audier says some, such as Freshfields and JSM, have hired French lawyers - and are likely to become an increasing source of competition for French clients.

The boutique model
But if Chinese firms represent increased competition for French clients, some believe it may take these locals a while to get up and running.
Shanghai-based Paul-Emmanuel Benachi from Thieffry & Associés says "the quality of services they provide will take time to come to the level of a boutique firm".

And it is the boutique model of business, rather than all-out international competition, that most French firms are pursuing in Asia.

According to Benachi, Thieffry & Associés is an operation that intends to maintain a high standard of specialised work for its clients from its one Asia office in Shanghai.

"This is a market that tends to develop a quantitative offer rather than a qualitative one," Benachi says. "The trend of the French firms in Asia is to grow fast and maybe faster than a quality of service requires."

Dubuis from Adamas said his firm also does not try to compete on an international level.

"We are trying to be clever, and have the best business we can in emerging markets," he says.

"The main idea is not to rely only on the flukes. Though investment is pouring in, this might stop or slow down. You have to follow the development of the clients that you have, and the market - there are new fields of opportunity opening all the time," he says

Pursuing more of a boutique model, firms are choosing to develop close relationships with local firms in different localities in Asia rather than open offices.

Benachi says Thieffry & Associes has developed strong relationships with local lawyers, IP and trademark agents in China, as well as firms in Korea, Singapore, Taiwan and Thailand to service the needs of its established clients.

Firms are also building localised practices. Adamas' Taipai office and Gide's Hanoi office are two examples of offices that are mixes of both French and local lawyers.

And firms aren't standing still, despite growing conservatively most of the time. Gide's Audier says the firm will continue to look at other markets where it may be able to see further growth, particularly India, as restrictions on international firms there are relaxed.

Dubuis says French firms "feel as we feel - you can't have a one country strategy".

India is one market on which Adamas is focusing, and in which Dubuis
claims it is more active than any other French law firm in Asia. "Our interest in India is based on most of the clients we follow in China have already or will have an interest in India," he says.

"We feel to compliment our China practice we would also need a Hong Kong office at some time or another, but Hong Kong is an investment and we are not ready to make it now."

One area of work these firms will be able to capitalise on in Asia, even as competition increases between them, the internationals, and local Chinese firms, will be the outflow of investment from China as it gathers pace in years to come.

King & Wood's Ching-Wo Ng says he considers the present outflow of capital "a trickle" compared to its potential in the future.

Naturally, as they look for investment opportunities, French firms are preparing for the growing interest Chinese companies are likely to have in France and in Europe.

"It is a very limited market at the moment, but we have tried to prepare for this, and we'll be ready to accompany these companies into France," Dubuis said.

GLN stays in the lead
Gide Loyrette Nouel is France's largest law firm, as well as a powerful independent international firm. It now has 19 offices around the world, with more than 600 lawyers and legal consultants, including 96 partners.

Supported by a firm foundation at home and an extensive global network, GLN has had a strong presence in China for almost two decades. It was one of the first foreign law firms to be granted a license from the Ministry of Justice to set up a representative office.

Since the Beijing office opened in 1993, GLN's China practice has filled out considerably. Currently it spans offices in Beijing, Shanghai and Hong Kong, managed by six partners and a team of more than 100 staff, including 60 lawyers.

Hong Kong expansion
The Hong Kong office which opened early last month is the newest member of GLN's global family. With a team of seven legal professionals, the office mainly focuses on project finance, M&A, foreign direct investment, infrastructure and taxation. 

Unlike most other foreign law firms, GLN opened its Hong Kong office after establishing a solid practice on the mainland. The new office is set to complement its mainland presence and to beef up its strength in the Greater China Region.
 
"A large number of our clients, who are doing business in China, have headquarters in Hong Kong," says Stephane Vernay, managing partner of both the Beijing and Hong Kong offices. "For others, Hong Kong offers lots of flexibility and is more frequently used as a channel for investing in China. So the Hong Kong office provides our international clients with an additional platform from which to do business in the region."

Government ties
Excellent Sino-French relationships, and a civil law tradition give French law firms a competitive edge in China. GLN has built up very close ties with the Chinese government, including with the Chinese authorities and key government bodies. Some of these government agencies even turn to GLN for advice on legislative or regulatory reform.

Thus, GLN has been able to branch out of pure legal work and into lobbying. Vernay says: "Our clients benefit greatly from our close ties with the government and good lobbying capabilities. Quick approvals are a good example of this. Also, lobbying capabilities are especially important in the nuclear sector and other strategic sectors for China."

Eminence in core markets
GLN has a long history in advising on infrastructure projects, public-private partnerships and project finance in France and abroad. It has brought its traditional practice with it to China and established a strong reputation in these areas. Another area in which GLN has extensive experience is international trade law (WTO and anti-dumping). The firm has successfully represented a large number of Chinese enterprises and foreign enterprises in anti-dumping proceedings instigated by either the European Commission or the Chinese government.

Also, as China embraces new opportunities, GLN evolves simultaneously to keep pace. At present the 2008 Beijing Olympics are keeping GLN's lawyers very busy. They have advised CITIC - the Chinese consortium - on the winning concession for the US$300m National Stadium construction project. They are also involved in setting up the security system for the Beijing Olympics and sorting out issues for the Chinese government, such as ticketing and certification for sponsors.

The firm has also experienced a strong growth in areas of foreign direct investment, M&A and IP.

Vernay believes the reason for the heat in M&As is that "the law is better organised and refined. The new legal framework is attracting more foreign investors who are interested in getting a foot in the door. They are keener on taking risks and buying shares in listed Chinese companies rather than assets." Sixty percent of the listed companies in France are GLN's clients,

Recently, GLN was involved in the third largest joint venture in China. It advised STMicroelectronics N.V., one of the world's largest semiconductor companies, in setting up a US$2bn joint venture with Korean company, Hynix in Wuxi. GLN successfully assisted STMicroelectronics N.V. in a US$750m syndicated loan financing.

Another new trend according to Vernay is "advising Chinese companies' outbound investment in Africa and Europe".  More large domestic companies are investing in European countries. Many large oil, gas, and construction companies are very active in African countries. With its strong presence in Europe and Africa, GLN is in a strong position to offer first-rate legal services.

Strong outlook
With its high profile team, strong support from its global network, greater presence in Hong Kong and continued strong performance from its mainland offices, GLN has a solid platform for future growth.

"We will continue to recruit more lawyers to increase the size of the team and develop the key practice areas so as to ensure our clients will have the best services for their needs," says Vernay.

"In the past four years, we've maintained an average 40% increase of turnover in our business in China and we look forward to greater opportunities ahead."

GLN Beijing representative office, tel: (86) 10 6597 4511, fax: (86) 10 6597 4551, www.gide.com