Going out

The impact of slacking growth has started showing itself and becoming a cause of concern for business people in the Yangtze River Delta (YRD).

Intense foreign investment and a robust private sector  have been serving as two pillars of the active economies of Jiangsu and Zhejiang, making them China’s most prosperous areas in terms of industrial and commercial development.

However, as export declines and the fund shortage worsens, the formerly export-oriental YRD enterprises are seeking new opportunities, some turning to the Chinese hinterland and some sailing abroad themselves. In particular, the “going out” move has an increasing popularity among ambitious entrepreneurs, observe lawyers.

“The local companies have been very active, and very proactive,” says Zou Jun, partner at High Mark Law Firm in Zhejiang.

The situation varies from sector to sector, though. Some industries like pesticide manufacturing are facing a saturated domestic market despite the fact that they may still have considerable margin if they are moving their producing capacity to supply certain foreign markets directly. Also, cheap and efficient Chinese companies have proved to be very competitive in infrastructure and construction projects in the yet-to-develop countries. Meanwhile, in the developed world such as Europe, many valuable assets are now for sale at low prices after being hit by the financial crunch, according to Zhu Honglan, partner of Jiangsu Yongheng Partners.

“The Chinese government is also heavily encouraging the going-out strategy,” she adds.
This means that YRD lawyers have a new and promising direction to head to in the face of approaching tough challenges.

Challenges

“I feel the concentration of business has intensified. In other words, the work flows into the big firms,” said Shen Haiqiang, partner at Zhejiang T&C Law Firm, while speaking of the new trends in the YRD legal market.

The big ones are getting even bigger, and the strong ones stronger, notes Zou. Big names attract more clients, and eventually result in the obvious tendency of polarisation.

“The big firms, or the so-called full-service ones, have all sorts of practices. For clients, it is much easier passing on everything to one firm instead of looking for a new firm on every new occasion,” says Zou.
Smaller firms have no other choice but to dig deeper in one or two specific practices and develop unique expertise. And within the full-service firms, each practice group is also growing their own specialties in the mean time.

“To survive in relatively sophisticated markets like Jiangsu and Zhejiang, specialisation turns out to be a necessity,” says Shen.

On the other hand, the growing legal knowledge of clients puts greater scrutiny on the quality of lawyers’ work, he says. Nowadays, not only are management teams getting familiar with legal issues, but in some small- or medium-sized companies (SMEs), in-house lawyers too have started emerging.

“Even their bosses have seen enough legal documents,” says Shen. “And they are expecting lawyers to provide not just advice about law, but also on all kinds of possible problems as well as solutions. They want better services.”

The higher requirement does not hinder the growth in the number of local lawyers and law firms, nor the penetration of the national franchise into regional markets. The large number of fast-growing companies and their needs for legal services in the YRD region has attracted well-established national firms to expand at a quicker pace. “Beijing- and Shanghai-headquartered firms are either opening here, or merging with local firms,” says Zhu.

The pressure of competition has, no doubt, mounted. YRD firms, and they are aware of this, appear to be the underdogs compared to national industrial leaders due to some inherent disadvantages.

“The Shanghai and, especially Beijing, firms have bigger influence on the government and regulatory authorities. And they are more innovative because they benefit from frequent exchanges with foreign firms and updates on international practices. There is also obviously more population and talent (in Shanghai and Beijing) than in second- tier cities like Hangzhou,” says Shen.

Although some clients and talented lawyers have turned to famous national brands, the YRD firms manage to retain their long-time customers with whom they blazed the way to foreign lands, thanks to their deep-rooted friendships.

Trust

“On long-served lawyers, local businessmen have developed a strong dependence, or what you can say is a natural reliance,” says Zou.

Such a relationship is effectively personal, and almost emotional. Sharing a similar dialect and regional sub-culture results in trust getting reinforced constantly over decades of close social interactions and successful business collaborations, eventually becoming steadfast and unalterable.

“It costs much time and money to build trust,” says Shen.

Geographical proximity also matters. Although modern communication methods have made virtual contact across long distances possible, they are yet to replace the conventional face-to-face engagement and exchanges on which personal confidence is built.

Once established, these solid bonds are difficult to challenge by outsiders. The switching cost is high especially when the professional capability of YRD firms is not very much different from their Shanghai or Beijing counterparts. For some clients, it is unimaginable to leave behind their good old attorney friends and nearly unacceptable to entrust their confidence and important business to a bunch of complete strangers for “mainly emotional factors,” according to Zou.

Fortunately, the fact that a majority of YRD enterprises are privately owned further stabilises the connection, Shen notes. Unlike state-owned enterprises (SOEs) where the management keeps changing from time to time, the ownership of a privately owned enterprise is not subject to such changes.

“This defines the stability of our relationship,” says Shen. “And however strong a Beijing firm is, it wouldn’t be hired if our client does not trust it.”

When a company wants advice, the first choice is always the long-trusted local firm, who has been taking care of all the legal issues from financing, listing to intellectual property throughout the years since the company was a start-up.

In this sense, the idea of “growing with clients” becomes a reality. Any new problem a client faces automatically gives a chance to the firm to expand its practice. When a private client plans to test foreign waters, its firm must accordingly turn itself into an outbound expert, as they are more likely to get the commission than the more experienced international or big national firms.

“In many cross-border cases, client recognitions weigh heavier than anything else,” says Zhu.

Coordinator

It has been a consensus among YRD firms that they must develop their international abilities. Like their clients, Chinese lawyers also have a wide gap to cross before reaching across the border. Different law systems and concepts, languages and cultures are counted as the major obstacles. However, lawyers believe the same business principles are accepted and applicable universally.

“The standards for judgement are the same,” says Shen.

As Chinese firms are unable to practise foreign law, they position themselves as “a trusted agency to coordinate the actions of other counsels.”

“We can facilitate the overseas expansion of private companies, acting as the leading counsel that liaisons and integrates legal resources worldwide,” says Zou. “Clients can simply call on to us and leave it to us to figure out a package of solutions.”

YRD firms often play the coordinator in outbound deals, brokering the cooperation between clients and foreign firms. This is because they are highly trusted by clients and also because normally, they are not adequately ready to take up such substantive work.  I It would take some more time for them to develop relevant strengths.

“We are fully aware that the best practitioners of such international practices are still with the international giants … But when clients need a foreign lawyer in this area, they ask us to find them out,” says Shen. “We are entrusted with the leading role.”

Promising partnerships are also formed during such interactions with international firms. “Many international firms also prefer working with us for our quick reaction, flexibility, and client relationship,” says Zhu.

Whilst going out, Chinese companies have an edge in international competitions as they normally provide similar products or services at lower rates. But lawyers warn that there are as many pitfalls as opportunities facing these new players in the international arena. Chinese companies, especially the private ones, are far from the most compliant corporations and some of them even carry similar behaviour patterns overseas.

“There are two causes. First is their insufficient knowledge or respect of international game rules. Second is their inability to change their old way of acting as it’s been long-shaped in domestic competition, although they do know the right way and take it seriously,” says Zou.

Even worse, some of them do not seek advice from a legal professional until hidden problems develop into disputes, liabilities or lawsuits when the intervention of a lawyer would probably be too late. And if the problem takes place in a foreign country, the remedy is that much more difficult.

To nip potential risks in the bud, local lawyers should get involved in their clients’ “going out” move as early as possible, according to Zou. Preventive education and constant alerts on international rules are highly recommended, so that scrutiny of the early stages of the deal can be done if possible. When a dispute occurs, positive mediation for a compromise is also what a diligent lawyer should do before the matter goes to court, where Chinese lawyers cannot appear.

“So we must closely work together with the lawyers of that particular territory in that case,” says Zou.

Work in contentment

“Going out” practices have made lawyers who have foreign language skills a must buy for firms in this region. Similar to colleagues in other second-tier cities, YRD firms favour homegrown, home-raised native practitioners. It is a natural preference because of the unique local sub-culture as well as the fast-rising standards in the market. Zou suggests that the younger generation fits into the corporate-style management that is being adopted by YRD firms much faster.

“We focus on developing our own high-end talent,” says Zou.

Nanjing and Hangzhou host some of the top law schools in China, providing a potential pool of prospects. But a city’s attraction to the country’s high-level legal talents is certainly subject to its economic development and the amount of opportunities it can offer. This effectively means the YRD region is ahead of most parts of China, but apparently behind state capital Beijing and neighbouring Shanghai, according to Shen.

However, Shen and other managers of YRD firms believe that the lower living cost, in particular house prices, could motivate talented lawyers to settle down in cities like Nanjing or Suzhou instead of crowded and polluted Beijing and Shanghai, since Chinese culture places “inhabit in peace” before “work in contentment.”

“There are more than enough foreign-trained professionals in Beijing or Shanghai. Such qualifications appear to be nothing special there. But it is still regarded highly in Nanjing or Anhui,” says Yongheng’s Zhu.

“These kinds of junior lawyers can enjoy special attention of the firms and extra opportunities with clients, which gives them much faster chance to develop.”

Shen of T&C explains the “extra opportunities” as involvement in structuring a transaction, participation in negotiations, and drafting documents and meeting clients early on in their careers (with the veterans in attendance).

“In big national or international firms junior lawyers, despite their outstanding qualifications, have to keep repeating a divided bit of simple work as a part of a big team for years, just like a labour on an assembly line, without knowing what the whole deal is like,” he says.

“But we just let the youngsters play the central part as early as possible and try as much and they can. We do not fear their making trouble, since they are under our senior partners’ cover to ensure the quality of work delivered to clients.”

Although great importance is attached to the “going out” and it is seen as a hopeful outlet for YRD firms under pressure from national powers, it is too early to say that it is a major growth point for now. Domestic transactions, after all, will still be the chief emphasis.

“What we will do about it is constantly improve our international capability,” says Shen.

<标题> 专题报道：长三角地区报告

<标题> 机会自远方来

<提要>

长三角地区的律师事务所不仅面临着来自上海和北京同行的竞争，还要应对当地不断下滑的私营经济所带来的越来越大的压力。为寻找出路，这些事务所正尝试与中国企业一起“走出去”，并构建它们自己的网络以发展业务和吸引人才。

<正文>

<副标题> 走出去

经济增长放缓的影响已经开始显现，并成为长三角地区的商人们所忧心的一个问题。

大量的外国投资和活跃的私营经济一直以来都是江苏和浙江这两个活跃经济体的两大支柱，帮助它们成为中国工商业发展最繁荣的两个地区。

但是，随着出口下降和资金短缺愈发严峻，长三角地区原先以出口为导向的企业正在寻找新的机会，其中的一些开始向中国的内陆地区发展，还有一些走向了海外市场。律师们注意到，越来越多雄心勃勃的企业家们正在开始“走出去”。

“在这个问题上当地的企业一直以来都非常积极主动。” 浙江凯麦律师事务所的合伙人邹峻说。

但是，各个行业的情况有所不同。一些行业——如农药制造业——的国内市场已经饱和，但是如果企业把部分产能直接搬迁到某些外国市场，依然能获得可观的利润。此外，低价且高效的中国企业被证明在欠发达国家的基础设施和建设项目上非常有竞争力。同时，在欧洲等发达地区，由于金融危机和融资难的冲击，很多有价值的资产现在正被低价抛售，江苏永衡昭辉律师事务所的合伙人朱红兰介绍道。

“中国政府也在积极鼓励企业走出去。”她说。

对于面临严峻挑战的长三角地区的律师来说，这代表着一个全新且有希望的发展方向。

<副标题> 挑战

“我感觉业务的集中性增强了。换句话说，项目都流向了大型事务所。” 浙江天册律师事务所的合伙人沈海强在谈到长三角地区法务市场的新趋势时说。

邹峻指出，大型事务所的规模越来越大，实力也越来越强。知名的事务所吸引更多的客户，最终导致明显的两极分化趋势。

“大型事务所，或所谓的综合性事务所，能提供各种类型的一站式法律服务。因而客户可以很方便地把所有事务都交给一家事务所办理，而无需在每次遇到新的状况时都去寻找一家新的事务所。” 邹峻说。

小型事务所除了深耕一两个特定的业务领域和发展独特的专长外别无选择。与此同时，综合性事务所内的各个业务团队也在持续扩展它们自己的专业领域。

“要想在江苏和浙江这些相对成熟的市场生存下去，必须走专业化道路。”沈海强说。

另一方面，客户不断增长的法律知识也使律师的工作质量受到更严格的审查，他说。现在不仅公司的管理团队对法律问题越来越熟悉，一些中小型企业也开始有了自己的公司法律顾问。

“甚至于这些公司的老板们都看过大量法律文件。” 沈海强说，“他们希望律师不仅提供法律方面的意见，同时还能就可能出现的各种类型的问题提供建议以及相关解决方案。简而言之，他们希望获得更好的服务。”

更高的要求并未阻碍当地律师和律师事务所数量的增长，也未阻挡全国性连锁事务所渗透入地区性市场的脚步。长三角地区大量迅猛发展的公司和它们对法律服务的需求吸引了众多知名的全国性事务所以更快的步伐在当地扩张。“总部在北京和上海的事务所或是在当地开办分所，或是与当地的事务所合并。” 朱红兰说。

竞争的压力无疑变得更大了。由于某些固有的劣势，与全国性的行业领头羊相比，长三角地区的事务所似乎处于不利地位，而它们自己也清楚这一点。

“上海，尤其是北京的事务所对政府和监管机构有更大的影响力。此外，由于它们经常与外国事务所交流并了解国际最新的实践，这些律师事务所的创新能力也更强。与杭州等二线城市相比，（上海和北京）显然也有更多的人口和人才。”沈海强说。

尽管一些客户和有才干的律师流向了知名的全国性事务所，但是凭借它们在当地深厚的人脉，长三角地区的事务所依然成功地留住了那些它们与之共同开拓进军海外市场的长期客户。

<副标题> 信任

“当地商人对长期为其服务的律师已经产生了强烈的信赖感，或者也可以说是一种自然的依赖。”邹峻说。
这种关系实际上是很私人的，几乎是情感性的。因为大家都说类似的方言，并且属于同一个地区亚文化群，经过几十年密切的社会交往和成功的商业合作，彼此间的信任不断增强，最终变得牢不可破。

“建立信任需要耗费大量的时间和金钱。” 沈海强表示。

地理位置上的接近也很重要。尽管现代的通信方式已使远程的虚拟联系成为可能，但是它们尚无法替代传统的面对面接触和交流，后者更容易建立个人信心。

一旦建立了信任，这种牢固的纽带关系就很难被外人所打破。更换事务所的代价是高昂的，尤其当考虑到长三角地区的事务所在专业能力方面较之它们的上海和北京同行并没有太大的差距。对于某些客户来说，抛弃与之关系良好且长久合作的律师朋友是不可想象的，而要将他们的信任和重要业务托付给一群彻底的陌生人更几乎是不可接受的，这“主要是出于感情上的因素”，邹峻说。

沈海强表示，幸运的是，长三角地区的多数企业是私营企业，这使得这种客户和律师的关系更加稳定。与国有企业的管理层经常更换不同，私营企业的所有权一般不会发生这种变动。

“这解释了我们之间关系的稳定性。” 沈海强说，“不管北京的事务所实力如何强大，如果我们的客户不信任它，就不会聘用它。”

当一家企业寻求法律意见时，首先肯定会选择自该企业创办起、多年来一直为其处理从融资、上市到知识产权等所有方面的法律问题的长期信任的当地事务所。

从这个意义上讲，“与客户共同成长”的理念变成了现实。客户遇到的任何新问题都为事务所提供了扩大业务领域的机会。当一家私营企业客户计划进军海外时，它的事务所必须相应地转变为对外投资事务的专家，因为它们比更有经验的国际事务所或大型的全国性事务所更有可能获得客户委托。

“在很多跨国项目中，客户的认可比什么都重要。” 朱红兰说。

<副标题> 协调人

发展国际化能力已成为长三角地区事务所的共识。与他们的客户一样，中国律师在进入国际市场之前也需要弥补巨大的差距。法律体系和概念、语言及文化的不同被认为是主要的障碍。但是，律师们认为同样的商业准则是放之四海而皆准的。

“判断的标准是相同的。”沈海强说。

由于中国事务所无法执业外国法律，它们把自己定位为“协调其他律师的行动的可靠代理人”。

“我们可以为私营企业的海外扩张提供便利，担任联络和融合全球法律资源的首席顾问。”邹峻说，“客户只需要把事情托付给我们，由我们设计出一揽子解决方案。”

长三角地区的事务所在对外项目中通常扮演协调人的角色，促成客户与外国事务所之间的合作。这一方面是因为它们深受客户信任，同时还因为它们尚未做好从事实质性工作的准备。它们还需要花更多的时间来充实相关的实力。

“我们完全清楚处理这种国际业务的最优秀的执业者依然服务于那些国际巨头……但是当客户需要该领域的外国律师时，他们会请我们去找到那些律师。” 沈海强说，“我们被委托担任主导角色。”

这些事务所在与国际事务所的交往中也形成了前景良好的合作伙伴关系。“由于我们的快速反应、灵活性和与客户的人脉关系，很多国际事务所也愿意与我们合作。” 朱红兰说。

在走出去时，中国企业在国际竞争中具有一定优势，因为在提供类似的产品和服务的时候，它们通常价格较低。但是律师们警告说，这些国际竞技场上的新手们拥有的机遇和面临的陷阱一样多。中国企业，尤其是私营企业，与最合规的企业相差甚远，其中的一些甚至把它们在国内的行事方式带到了海外。

“这有两个原因。首先是它们对国际游戏规则不够了解或不够尊重，其次是尽管它们明白正确的行事方式并且也报以认真的态度，它们却无力改变过去的做法，因为这种做法是在国内竞争中形成的，且根深蒂固。”邹峻说。

更糟糕的是，某些企业不征求法律专业人员的意见，直到隐藏的问题发展成纠纷、法律责任或法律诉讼时才向专业人士求助，而这时律师的介入可能为时已晚。并且如果问题发生在外国，要采取补救措施就更加困难。

邹峻指出，要把潜在的风险扼杀在萌芽中，本地律师应该尽早参与到他们客户的“走出去”行动中。邹峻非常推荐就国际规则进行预防性教育和持续性提醒，这样可以尽量在交易的初期进行审查。一旦发生纠纷，尽职的律师应该在该纠纷被提交到法院前（中国律师无法出庭）为双方的和解进行积极的调解。

“因此我们必须与案件所在地区的律师密切合作。”邹峻说。

<副标题> 安居和乐业

“走出去”战略使会外语的律师对于长三角事务所来说变得必不可少。与其他二线城市的同行一样，长三角地区的事务所也倾向使用土生土长、在当地接受培训的执业者。考虑到当地独特的亚文化和快速提高的市场标准，这是一种很自然的倾向。邹峻也认为，年轻一代律师能更快地融入正被长三角地区事务所采用的公司制管理模式。

“我们专注于发展我们自己的高端人才。”邹峻说。

南京和杭州拥有一些中国的顶尖法学院，提供了一个潜在人才库。但是一座城市对高水平法律人才的吸引力当然也部分取决于它的经济发展水平和可提供的机会数量。从这个意义上讲，长三角地区领先于中国的大部分地区，但显然落后于首都北京和近邻上海，沈海强说。

但是，沈海强和其他长三角地区事务所的管理人也认为较低的生活成本，尤其是房价，可能促使有才干的律师在南京和苏州这些城市定居，而不是呆在拥挤且污染严重的北京和上海，因为中国的文化把“安居”放在“乐业”之前。

“北京和上海有太多海归的法律专业人员，这种职业资质在那里似乎随处可见。但在南京或安徽，这种资质还是很被看重的。”永衡昭辉律师事务所的朱红兰说。

“这些[海归]的初级律师在事务所可以获得特别的关注以及额外与客户接触的机会，这给他们带来了更快的发展机遇。”

天册律师事务所的沈海强解释说“额外机会”是指这些初级律师在职业生涯的早期就有机会参与安排交易、参加谈判、拟定文件以及（在资深律师的陪同下）与客户会面。

“在大型的全国性或国际事务所中，初级律师即便拥有出色的专业资质，也不得不在很长一段时间里，作为一支大团队的一小分子不断重复做一些被分配到的简单工作，就像组装线上的一个工人，他们不能了解业务的整个过程。”他说。

“但是我们会让年轻人尽早起到核心作用，尽可能多地让他们去尝试。我们不担心他们犯错，因为有资深合伙人对他们进行监督，以确保交付给客户的工作的质量。”

尽管长三角地区事务所都很重视“走出去”，并把它视为面临国内巨头竞争压力下的一条有希望的出路，现在就把它称为一个主要增长点还为时尚早。无论如何，国内业务依然是重中之重。

“我们要做的就是不断提高我们的国际化能力”沈海强说。

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