The 17th Tianjin Trade Fair & Investment Talk gathered together hundreds of delegates in June, including state officials, business representatives and legal professionals. All participants came to discuss the economic development of Tianjin, and unravelling the impending opportunities driven by positive government policies and stimulus packages. About 940 major projects have led to an investment of nearly US$294bn in the region since 2007.
These projects include an aircraft assembly line, a new petrochemical complex, a next-generation space launch vehicle centre, a large oil refinery and a shipyard. With the ceaseless amount of projects and investments coming into the city, the Tianjin legal services industry no longer takes a back seat to other cities.
In December last year, Sinopec entered into a US$2.7bn joint venture with Saudi Basic Industries Corporation (SABIC) and launched a new petrochemical complex in Tianjin. The deal was advised on by Global Law Office, King & Wood, Jun He and White & Case, and further boosted economic development of the New Binhai District and the Tianjin municipality. "Tianjin's economic and legal services growth is still largely fuelled by the construction of the Binhai New Area. A lot of demand for legal services derives from infrastructure and petrochemical projects like the one between Sinopec and SABIC," says Li Haibo, managingpartner at Winners Law Firm.
Airbus has already delivered 15 A320 aircraft since its assembly line began operations in Tianjin in September 2008. Richards Butler, Run Ming and Clifford Chance advised on the delivery of the first A320 aircraft last year. Clifford Chance also advised on the establishment of the Airbus A320 final assembly line in Tianjin in 2007 -yet even bigger plans remain. According to statements released by Airbus last year, the Tianjin facility plans to assemble and deliver another 26 planes in 2010. Apart from Airbus being a dominant player, Tianjin has also attracted a growing number of international all-cargo operations, including China Cargo Airlines, Great Wall and Jade. Grand Start, the joint venture all-cargo offshoot of Korean Air, has also set up its base at the airport.
The aviation and aerospace sectors have grown into business pillars for Tianjin, making it the only city that owns both industries. While Shenzhen is the frontline of China's opening-up campaign and Shanghai's Pudong is a pilot area for a market economy system, Tianjin's Binhai New Area, a major economic development zone, will have evolved into the leading area for scientific development in China.
Private equity: new work for lawyers
Significant projects in Tianjin have made potential opportunities hard to ignore. Investors have, over the past two years, flocked into Tianjin, establishing their private equity industry funds for booming sectors and developing districts - like the Binhai New Area and the Tianjin Economic-Technological Development Area (TEDA).
Winners' Li makes specific mention of the growth seen in the aviation industry fund sector. "The aviation market in Tianjin has been boosted by the activities of Airbus. In the last 12 months, we have been facilitating interests from other aviation companies like Japan's Orix, one of the world's strongest aviation leasing companies, who are looking to establish an aviation industry fund," says Li. The firm is also acting for Hainan Airlines in their PE fund set-up.
As of April 2010, there are 393 registered PE funds and fund management companies in Tianjin, with an accumulated registered capital reaching RMB77.5bn and more than RMB40bn invested in various industries. The Tianjin figure outnumbers those of Beijing and Shanghai with the Tianjin Economic
Development Area taking top place across the country, in the number of PE investment enterprises located there.
According to King & Wood's Tianjin partner Hua Lei, the PE sector is one of the top three revenue streams for King & Wood's Tianjin practice (foreign investment and M&A being the other two). The firm has advised on numerous establishments of foreign-invested funds over the past 12 months.
Like King & Wood, Grandall Legal Group (Tianjin) has also helped many PE companies set up their local funds in the region. According to Tianjin partner Li Bin, regional policies and stimuluses for PE companies have made Tianjin a very attractive destination. "The PE sector has brought in a lot of work for our firm over the past 12 months.The growth is evidence of the business activity and opportunities in the region," says Li.
Grandall Tianjin, with 11 partners and over 50 lawyers, has been very successful in the region. The firm is listed as one of the top three earners amongst all the other law firms in Tianjin in 2009. Its success, Li says, stems from its interdependence with Grandall's regional offices, especially those located in Beijing, Shanghai and
Guangzhou.
According to King & Wood's Hua, competition from fellow Beijing firms makes pitching work for local firms very challenging. "With the increasing complexities in deals, especially in M&A, PE and capital market transactions, clients are starting to appreciate innovative expertise and resources that the larger firms have," Hua says.
Finding a niche
Responding to market trends and client demands, Winners Law Firm boosted its partnership by hiring four new partners recently. The firm also established a couple of new practice areas - environmental law and antitrust - to stay ahead of the game.
The environmental law unit is being led by Li, with the support of partner Wang Rong and three other lawyers. Since the establishment of its environmental business, the firm has been involved in many related transactions. "We are helping clients complete deals in clean energy conversion and business restructuring," says Li, who goes on to note that this sector work often complements contract and banking & finance advice - requiring its lawyers to review contracts for high-energy consumption companies like thermal power plants, hotels or office buildings to develop energy saving structures. Long-term clients include Zhongxin Energy Technology, China Energy Conservation and Environmental Protection Group, and Broad Central Air Conditioning.
Winners sees its new niche practice areas as a pedestal for tackling new regions. The firm has recently taken its first step into Beijing, becoming the second Tianjin firm - Hanyang Law Firm was first - to open in the first-tier city. Subject to receiving regulatory approval, the firm is planning to relocate three of its core partners, including Ning Peijun and Guo Weifeng, to the new location. Plans are also underway to hire local Beijing attorneys.
According to the managing partner, Li Haibo, the firm's decision to launch an office in Beijing is due to the many client requests it has received. Longterm clients like Standard Chartered Bank, which Winners advised on PE related transactions in Tianjin, asked the firm to have a Beijing presence to better serve their legal needs.
"There are an increasing number of Beijing and Shanghai firms coming into Tianjin to seize market share. Yingke is one of them, they have their eye on the major infrastructure projects here and to service domestic PE funds. We have a relatively strong foundation in Tianjin now, so it's about time for us to take on the Beijing locals," Li added.
While great ambitions to tackle the Beijing market still exist, local lawyers acknowledge the immense difficulties to succeed in the first-tier city. "Being a lawyer in Tianjin requires a lot of local expertise - but it's very different in Beijing. You need to know how to be a businessman in Beijing, it's not just about being a lawyer," said Qiu Mingzhou, managing partner at Mingzhou Law Firm.
"It's very complex, especially since the Beijing market is much more saturated." According to Qiu, without specialties and strong strategy, Tianjin firms will continue to find it very challenging to make their name in Beijing. ALB
