The recent US/China Economic Dialogue discussions held
between the two countries further cements their powerful
business and bilateral relations. ALB examines the new
playing field for 21st century deals
More than 50 representatives from over 40 government departments of both China and the US participated in the Sino-US Strategic Economic Dialogue, held in Beijing in May. And as the world prepares for the powerhouse, deals between the two nations continue to roll out. Most recently, a tiny town in Mississippi announced a US$175m investment by China’s Anshan Steel in upstart Steel Development Corp.
Given the ceaseless dealflow between China and the US, lawyers are positive about the impending dialogue; that it will mark the continuation–post-GFC–of the most important bilateral economic relationship in the world. And it is no wonder that China’s law practices are being hailed as one of the few high-growth engines at this time. Firms like O’Melveny & Myers have a bullish outlook. “I think China has come back faster than most markets. In the past few months, different practice areas like capital markets, private equity and FDI have revived quicker than others. We are well into recovery mode,” says Howard Chao, partner-in-charge of O’Melveny & Myers’ Asia practice.
Physical presence is pertinent
Continued growth of the Chinese economy and increased global business ties have been the impetus for law firms to launch in the region. Most recently, Boston-based Ropes & Gray hired Arthur Mok as a partner to help open its planned Shanghai office, taking him from Hogan & Hartson.
Since 2009, several firms – including Winston & Strawn, Latham & Watkins, Steptoe & Johnson, Kirkland & Ellis and Diaz Reus – have set up on the mainland. “Over the past few years, there has been significantly more momentum by US firms wanting to have a physical presence on the mainland. Given the transactional activity flowing through this market, US firms are a lot keener on being here,” says Mok. “It is hard to understand the market and build relationships if you are not physically in the market,” he adds. Besides being able to better identify business issues and understand corporate culture, having proximity to clients and sourcing business locally is also of the utmost importance. K&L Gates is a firm that exemplifies this concept, attributing its increasing mandates to proximity (having offices in Shanghai and Beijing) with clients. “Being on the ground for us is critical for what we do, because we need to be
in constant contact with our clients,” says partner David Tang (pictured). “Having an actual physical platform on the ground has helped tremendously.”
In Morrison & Foerster’s case, proximity has not only boosted the firm’s relationship with existing clients, it also brought in new mandates that it otherwise wouldn’t have attained. “On some of our deals we wouldn’t have gotten the engagement and certainly wouldn’t have been able to support the work the way that we do, without a Beijing office. The work came in because we are here, we are at the front of the line for the client,” says Paul McKenzie, the managing partner of MoFo’s Beijing office. According to McKenzie, the Beijing office plays an important management role by interfacing with clients in their own language and in a cultural manner that they are accustomed to. "Clients are worried about what they do not know, and having someone in the region who can help reassure them is always appreciated,” he explains. Moreover, lawyers say that having an office where their clients are based instils credibility.
Henry Liu, managing partner of Nixon Peabody’s China and Asia practice, adds that this is especially important for Chinese clients. “If you don’t have a solid local presence they just don’t find you credible,” he says.
NEXT: Homebound China desks
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