All roads lead to Tianjin

After a four-hour flight, the first locally assembled Airbus A320 aircraft landed smoothly at Tianjin Binhai International Airport in May 2009.

The successful test flight is an important milestone for Airbus and its final assembly line in Tianjin, which was established in 2006 as a joint venture between Airbus and a Chinese consortium. It also tells the story of Tianjin - after years of preparation and anticipation, the city is taking off and starting to reach its potential.

According to official statistics, in the first half of 2009 Tianjin achieved a year-on-year gross domestic product growth rate of 16.2%, more than double the national average. Development of the legal industry is growing at an even faster pace, with a 36% increase in the number of firms and a 14% increase in the number of legal professionals. There are now almost 300 law firms and more than 2,500 practicing lawyers in the city.

Beijing-headquartered Guantao is among many national firms that have found this leading industrial centre an attractive place. The firm established its ninth branch office in Tianjin in April with six partners and 11 lawyers, and recruited seasoned local practitioners, Ma Kewei and Cong Ying, as partners to lead its future development.

Both Ma and Cong were previously with local firm Join & High, where Ma served as the co-founder and executive director. "Tianjin's economy is robust and is growing rapidly, it is a strategic location for Guantao's expansion," says corporate and M&A partner Ma.

National firms that entered this market a few years ago are starting to reap the rewards from the city's rising demand for corporate legal services.

"In the past year, we have added two more partners to our team because of the increase in demand for legal services. It has become crucial for us to strengthen our local practice," said Hua Lei, partner-in-charge at King & Wood's Tianjin office. The office now has five partners and 14 lawyers.

Leading local firms like Winners have also recognised the pressure from increasing competition in the market. Practices have been adjusted and offerings increased to reinforce the local firm's positions.

"It's only been [in] recent years that firms are realising the business opportunities ... more law firms are setting up offices in Tianjin," says managing partner, Li Haibo. "Local firms continuosly need to adopt new approaches and strategies in order to stay on top of growing competition."

He says that "the competition and challenges come from different aspects. International firms and large domestic firms, who are renowned for their brandings, reputations and resources, tend to win larger-scale deals and projects. On the other hand, as a mid-size, [we] have to compete with small firms that offer much lower charges."

As part of a development strategy to expand from 32 lawyers and 11 partners, Winners plans to add two new practice areas - taxation and anti-monopoly - and hire more specialists. Over the past year, it has already recruited 10 lawyers.

"We are confident that as the economy picks up, there will be more M&A deals and these new practice areas will undoubtedly flourish," Li says.

Member of international independent law firms group Lawyers Associated Worldwide (LAW) since 2007, the firm plans to develop a strong international business practice and better service local clients who are increasingly investing overseas.

All systems go
Although new entrants intensify competition, it doesn't mean that market share is getting smaller. The city's rapid economic development owes much to its endeavours to attract foreign and inter-provincial investment. This will create more demand for legal services in new and existing market segments.

"Tianjin's state council tries to attract foreign investments by introducing attractive incentives and financial innovations. Where these privileges [are] there will be investors, and where there are investors, there will be more business opportunities for law firms," says King & Wood's Hua.

The focus of development lies within the Binhai New Area (BNA), on the eastern coast of Tianjin. Its modern manufacturing and research and development base, plus international shipping and logistics industries, high-tech development and port are important assets for this region.

BNA is one of the fastest growing areas in northern China, playing a key role in boosting domestic demand. Six pillar industries have been identified: electronics and IT, automobile manufacturing, biological technology and modern pharmaceutics, metallurgy, petroleum and ocean chemicals, new energy and environmental protection.

Winner's Li pointed out the automobile, aviation and chemical engineering industries as three that have flourished in the past year. "The automobile industry in particular has matured a great deal in Tianjin," he says. "Automobile traders TJFAW and Changcheng have established offices this year, and the aviation industry also [has the] Tianjing Airbus assembly line, which has built and successfully leased out the first A320."

"In terms of the chemical engineering industry, China Bluestar, a large-scale state-owned enterprise focusing on chemical products and new materials, has also set foot in Tianjin."  King & Wood played a part, representing SFS intec, a global manufacturer and supplier of mechanical fastening elements, in its 50% acquisition in the Chinese subsidiary of Sunil Dyfas, a Korean parts manufacturer (primarily for Korean automobiles).

The new joint venture serves as an important pre-condition for intensifying business relationships in the region, which is also becoming known for having a strong service sector. "The service sector within Tianjin is held as top priority, as part of [its] strategy to attract more foreign investors," King & Wood's Hua says. A number of insurance companies are relocating, while many international banks like Deutsche Bank and Mizuho Corporate have opened retail operations in the area.

Winners is also busy with corporate deals through development of the BNA. The firm is contracted to provide legal services for transactions relating to the southern development area.

It is acting for China Development Bank on its loans to the US, a complex billion-dollar transaction involving Panama, Mexico and Costa Rica. Singapore City Development has also engaged Winners' for its billion-dollar acquisition of Tianjin real estate.

The city's increase in new operations is the symbol of stronger confidence from both domestic and foreign investors. The causal effect - where increased investment privileges equate to a larger number of foreign investors - is proven. Law firms in Tianjin can continue to reap the fruits of what seems like a win-win state of affairs at present.

As the BNA's fast-growing skyline continues to tell the vivid story of Tianjin's rise to prominence, the legal profession is working hard to ensure their practices are woven through the fabric of the city's history.