2021 ALB China Top 15 General Counsel
China’s most outstanding general counsel are today actively participating in their organisations’ strategic business decision-making by using their legal expertise and industry knowledge to help expand business areas, explore emerging markets, optimize business models, and protect the innovation resulting from R&D. They are also having significant impact on, and playing an important role in, promoting industry legislation.
The general counsel in the list this year hail from multiple industries, including the Internet, healthcare, consumer goods and education. With the rapid development of these industries, general counsel have taken on greater responsibilities. Ma Yihan, general counsel and vice-president of mass media company Perfect World tells ALB that the general counsel is the guardian of the company's interests, and meanwhile, a part of the company's strategic assets. As the guardian, the general counsel collaborates with other departments in formulating and perfecting risk management systems and rules, and meanwhile fosters the company's compliance culture, and advocates the idea of "where there is an effort, there is a profit". In handling specific projects and transactions, the general counsel communicates effectively with the management team with regard to core operation issues to ensure that the management team makes informed decisions.
As a part of the company's strategic assets, "the general counsel ought to keep abreast of the changes of various stakeholders in the ecosystem where the company lives and know well the company's industry in terms of the domestic and overseas business environment, trading logic and regulatory situation, and should be able to foresee the possible impact of those changes, and then communicate with the management team effectively, to reduce the business decision-making errors caused by lack of information," Ma says.
Having served as the legal general manager of Netease Games for seven years, Zhou Jie (Audrey) believes that a good general counsel should have keen business acumen, efficient decision-making ability, excellent leadership, and be good at absorbing talents and empowering the legal team, in addition to having profound legal expertise.
"It means that the general counsel must first have an overall view and strategic thinking, and be able to provide innovative and practical solutions to complex and difficult problems; secondly, we must know really well about the business operation model and the company's business goals, to form a forward-looking prediction of the industry development trend, so that we can develop contingency plans beforehand to respond to possible risks in the future; and finally, as a manager, the general counsel's responsibilities also include fostering a team culture that helps build a team with strong resilience and the spirit of cooperation," Zhou says.
Zeng Ni (Jenny) is the head of the legal compliance department at Ping An Medical and Healthcare Management. She shares with ALB her observations of the role of general counsel. She believes that there are four connotations about this role. First, the general counsel must be the whistle-blower of the company. "As general counsel and legal professionals, keeping abreast of the changes in laws, regulations and policies is our needless-to-say job. I believe that it is our first-priority job to timely learn about changes in laws and policies, and give timely warning – blow the whistle, to ensure the healthy and compliance development of the company," Zeng says.
But that does not mean that the legal and compliance department is in opposition to the business department. On the contrary, the general counsel is the helper, which is the second important role of the general counsel – helping the transactions to proceed more smoothly, helping to prevent transaction disputes, or even helping to design transaction structures, so that the company's interests can be maximized, Zeng points out.
The value of the general counsel is also seen in the role of "adviser". In Zeng's view, the general counsel sees the business operations from a more macro perspective. Based on long-term work experience in dealing with risks and uncertainties, and with the keen insight of policies and regulations, the general counsel is able to contribute to the company's strategy and bring more value to the company.
Furthermore, Zeng sees the general counsel as someone who binds the whole team together. "When leading a team, it is important to make sure that each member knows well about the company's strategic goals, inspire their sense of ownership and responsibilities, and allow the value of each member to be seen. Building a cohesive, efficient and responsible team, empowering each member to be their best, and accomplishing tasks successfully, I believe that these are the duties of the general counsel," Zeng tells ALB.
As the general counsel of the commercial legal platform at electronics and appliances company Haier Group, Zhang Cuimei believes that the role the general counsel is closely connected with the company's strategy. The general counsel is not only a legal expert, but also should "have three mindsets and capabilities, and should be able balance two relationships. The three mindsets mean to think from technology, business and globalization perspectives. Technology means innovation and keen sense of new opportunities. Business means supporting the implementation of the company's strategy, helping the business to develop with the focus on the company's core competitiveness and differentiated profit model, and staying alert of compliance risks in the international market. And balancing two relationships means to ensure the balance of compliance risks and the company's strategic development and innovation, and the balance of the team's undertaking of the company's overall strategy and maximization of employees' personal value," Zhang explains.
BALANCING LEGAL AND BUSINESS
The COVID-19 pandemic has defined the past year. According to Zeng of Ping An Medical and Healthcare, the pandemic has exposed some weaknesses of China's medical insurance and medical service providers, such as the lack of access to medical services, and the lack of medical inspection and testing capabilities; basic-level medical care services need to be improved to meet the healthcare needs of individuals; and the medical insurance fund is under greater pressure. Seeing the big picture of the industry and the macro trend of intensified regulation, Ping An Medical Insurance Technology makes every effort to strengthen services in the related business areas. With the continuous emergence of new businesses, how to ensure compliance while supporting the business development has become a major challenge facing the general counsel. Zeng believes that amidst the emergence of new businesses, to achieve the compliance-business-balance, it needs both the expertise and the art of managing.
"In a nutshell, we must stick to two fundamental principles: the first and primary one is to know where our bottom line is and what our responsibilities are, and then hold fast to them; and other one is to have a profound knowledge of the company's businesses and business logic. The conventional legal compliance work is often criticized for lack of understanding of business, which could be fatal in a fast-growing and changing industry. At Ping An Medical and Healthcare, we call the understanding and knowledge of businesses and business logic as 'forward-leaning'. If comparing the first fundamental principle to the 'foundation' of our legal work, we must 'lean forward' while firmly rooted in the foundation. Leaning forward is an attitude and also a manifestation of the capability of creating more value. To back the sound development of the company and to effectively balance innovation and risk, I think that is where the important value of the legal and compliance department is manifested," Zeng says.
The past year has also witnessed the rapid development of the Internet industry. Ma tells ALB that during the past year or two, the Internet entertainment industry has been dynamic, but full of competition, and meanwhile showing strong momentum in going overseas; and business models and product models in the industry have continued to innovate. These trends have been manifested in the sectors of online games and live streaming. Zhou says that that these sectors are gradually showing the development trends of high-quality, diversification and internationalization. Gaming companies pay more attention to the quality of games, endeavour to create high-quality game contents and explore new types of games, and practice the "going global" strategy while continuously developing new business formats. Chinese game products are gradually having a greater influence in the international market.
Regulations have intensifie as the industry has boomed. "At the regulatory level, many important new regulations have been introduced; at the same time, the regulation has been further intensified, with more efficient approaches and tools applied. To be specific in our industry, the changes in regulatory requirements and the legal environment are manifested in three aspects, namely, data compliance, intellectual property rights, and content compliance. For example, the Civil Code, the Personal Information Protection Law (Draft), and the Data Security Law have been promulgated or come into effect, the Copyright Law, the Patent Law, and the Minors Protection Law are undergoing major revisions, and several competent authorities have carried out intensive special inspection on the collection of personal information by apps. All of these put forward higher requirements for the internet entertainment industry in terms of content production, distribution, operation and internal compliance management, requiring us to quickly interpret and adopt corresponding compliance response measures," Ma says.
In this context, one of the big challenges facing legal teams is how to help companies maintain their market competitive edges under the premise of compliance. In Zhou's view, "compliance is of beneficial importance to business. At NetEase Games, the legal team provides a strong guarantee for the company from the compliance and legal perspectives, helping the company to realize the business objectives and navigating the compliance operations of new projects. Furthermore, the company's legal team with both business and compliance thinking can be deeply involved in the formulation of relevant industry policies, regulations and standards, thereby promoting legislative and judicial progress from a practical perspective."
Ma agrees with Zhou and says: "Companies' business activities must be carried out in line with legal and regulatory requirements, so as to create a business environment of fairness and good faith. This is the bottom line –– companies cannot involve what is prohibited by law. But in the era featured faster development of digital economy, technologies, products, and business models, compliance and legal requirements sometimes are vague or lag behind. In such cases, we'd comprehensively evaluate legal risks from multiple perspectives such as product research and development, business goals, and public interests, to find the risk boundaries, thereby ensuring the compliant operation of businesses, and meanwhile promoting the development of the business. At the same time, we continue to pay attention to changes in policies and regulations to redefine the risk boundaries in a timely manner."
The general counsel have all taken innovative steps to respond to challenges in the past year. "Our team has adopted innovative technical means to respond to the challenges," Zhang of Haier Group says. "Given that Haier is multinational corporate, we continue to upgrade our global legal risk digital management platform to meet the needs the compliance work in the era of big data, and deepen the integration of law + technology application and business objectives; and we have adopted modularized, productized, and digitalized systems for contract management, company management, compliance management, internal and external lawyer management, and case resource management. In this way, those systems can be flexibly assembled and seamlessly connected with the entire business and financial systems, so as to break down barriers to information sharing, and improve the efficiency of smart management of business risks. In addition, we set up the business law cloud which includes the data on practical experiences of the legal department, as well as laws and regulations around the world and the related cases, enabling us to carry out timely and efficient analysis of different cases based on the up-to-date and comprehensive data, and form guiding opinions on legal risks. On the basis of the business law cloud, we implement the modularized management system to handle contracts and company-related matters. We also use the system's 'grabbing orders' function and remuneration function to improve the work efficiency of the legal team members. Furthermore, with the centralized processing and archiving functions of these systems, we deal with the legal work requiring profound expertise in a centralized way, realize legal information sharing, and regularly produce legal evaluation reports, thereby supporting the company in achieving business strategic goals, and meanwhile maximizing the business value of legal services," Zhang continues.
Perfect World's legal team also uses innovative technical means to improve work efficiency. Ma tells ALB that aiming to use big data analysis to empower the company's business, her team has set up four digital legal service and management systems tailored to the characteristics of the cultural businesses, namely, the contract review and data analysis system, the infringement clues and litigation case management system, the infringement monitoring system, and the trademark search and review system, to provide visual and forward-looking analysis tools for the company-wide contract review, intellectual property protection and informed decision-making for businesses.
Among the said four major systems, "the contract review and data analysis system has excellent contract management functions, helping us significantly improve the contract review efficiency; at the same time, it can quickly identify operational risks and trends by digging into the big data to provide objective, visual, and quantifiable support basis for management's decision-making, and directly help business lines improve the operation management and risk control capabilities," Ma points out.
In addition, the main line of business of Perfect World is a typical Internet 2C business, with fast product iterations and many cutting-edge innovations, the contract review alone is no longer sufficient to deal with increasingly complex compliance risks. Considering that, Ma innovatively proposes to train the product-manager kind of legal counsels. "Our legal team adjusts its positioning quickly – in line with the characteristics of the VUCA (volatile，uncertain，complex，ambiguous) era at a macro level, and taking into account every detail of Internet product development and operation at a micro level – transforming traditional legal counsels from contract review specialists to 'product managers who see things also from legal perspectives', and meanwhile know well every detail of products. As the product-manager kind of legal counsels, we develop one-stop, full-cycle and flexible compliance solutions for products from project establishment to online operation from dual perspectives of user experience and regulatory compliance," Ma explains.
Guided by that ideology, Perfect World's legal team members are proactively involved in each project from the very beginning to gain comprehensive knowledge of the business model, R&D operation, and market layout, so as to provide all-round supports from market access, competitive product research, online protocol development, intellectual property protection, and day-to-day operations, and to ensure that the supports keep pace with the product iteration. By digging into the ins and outs of a product, the legal team reviews the functional design, interaction interface, page jumping logic, text identification, customer service process, and response to customers from the dual perspective of "user's perception + regulatory compliance".
"Now, the legal department has become the 'checkpoint' in the product development, and the product-manager kind of legal counsels have been truly balancing well business demands and compliance requirements in effective collaboration with the business departments," Ma says.
The legal team of Netease Games have dealt with a number of cases with ground-breaking significance in online gaming industry. Zhou tells ALB that in the process of IP rights protection, their legal team independently completed the live broadcast dispute case of Fantasy Westward Journey, which was regarded as the first case of infringement of live broadcast of online games in China. This case pointed out the direction for the standardization of China's live broadcast in this industry. In addition, they also completed a series of anti-monopoly cases in Fantasy Westward Journey II. As the first game monopoly dispute case in China, this case is of great significance for clarifying industrial rules and giving guides to regulation of the development of online gaming and live broadcasting.
“We hope that through these cases, judiciary can give clear judgment to emerging legal issues in our industry, which can help set up some rules and promote a more healthy and orderly development in gaming industry,” Zhou says.
The interviewed GCs all tell us that they have observed the trend of stricter regulation in their respective industries. Zhou believes that from the policy perspective, as the online game industry has been growing rapidly, the government authorities have tightened the overall regulation of game contents, the industry legislation has been gradually perfected, and the judicial organs have been issuing measures to address game-related legal issues. It is foreseeable that the online game industry will gradually see a healthy, orderly and prosperous development trend with the intensified industry regulation and protection policies.
In this context, Zhou will lead the legal team to continue to conduct industry research, proactively participate in the formulation of policies, regulations and standards related to online games, live-streaming, and e-sports, and promote legislative and judicial progress, thereby promoting the healthy and sustainable development of the company and the industry. Zhou also plans to train her team to be more resilient, gain better insight of the company's business goals and business models, perceptively identify risks and promptly propose solutions that meet business needs. Furthermore, the legal team will continue to introduce legal talents with international background and expertise in related areas to give robust support to the global distribution of products, and advancement of the company's investment layout and globalization strategy.
Ma observes that the digital economy boom will bring more unknown opportunities, while the rapidly changing market environment has become more unpredictable and uncertain. As the government intensifies data protection and content regulation, more detailed regulations may be introduced with regard to new issues such as virtual currency, virtual property, and blockchain.
"To cope with these coming changes, I hope that my team stay curious about new things, like to study and be able to learn continuously. At the same time, they should continue to polish their skill sets, and keep up-to-date to the legislation and judicial precedents in the related areas and industries at home and abroad," she says.
Zhang highlights the organic combination of technology and talent intelligence. First, they would start from the platform and system construction, which is to build a compliant legal ecological cloud drawing on the strength of digitalization and technology. Second is about the development and positioning of the team members. The legal team members will receive training on knowledge structure, helping them to build a law-based knowledge system with extension into technology, finance, investment and emerging industries. Thirdly, a mechanism with the orientation of maximizing the value of individuals will be built, enabling the legal team and the business teams to aim at the same goals and formulate rules together. And finally, efforts will be made to build the legal team into a team with strong forward-looking capabilities and insightful perspectives, and establish a legal digital industry think tank to be up-to-date to compliance-related governance legislation, and keep abreast of the industry trends.
Zeng observes that the frequent adjustments to the regulatory policies for the medical insurance system show that the government is determined to reform the system. Driven by favourable policies, the industry and the companies' businesses prosper, and many innovative businesses, models, and products have emerged, but they are all in the stage of "crossing the river by feeling the stones". Given that, the legal team of Ping An Medical and Healthcare will need to continue exploring to perfect rules, or sometimes even to create rules, to train forward-looking capabilities in legal and compliance work, and to promote team growth through long-term continuous practice and training, so that the team would be able to stay resilient in all circumstances.
To contact the editorial team, please email ALBEditor@thomsonreuters.com.