Having achieved a 60% growth in annual turnover as at the end of September 2009, Beijing-headquartered Longan is pressing ahead with the expansion plans it formed two years ago. The firm has recently established its Nanjing branch and expanded its Shenzhen office significantly through two acquisitions.
The new Nanjing office, headed by partner Su Dejun, is primarily focusing on IP matters. Su will soon be joined by three partners and two lawyers transferring from other offices.
In Shenzhen, under the leadership of office managing partner Jia Hongwei, the firm has successfully acquired the Shenzhen team of Beijing Kehua and merged with Shenzhen local firm Pengsheng in recent months. Currently, Longan's Shenzhen office has more than 50 lawyers, including 16 partners, and is a noticeable player among Shenzhen's mid-sized firms.
According to the firm's development roadmap, new offices in Hangzhou, Ningbo, Tianjin, Chengdu and Hong Kong will also be set up in the coming years.
Longan's founding and managing partner Xu Jiali sees acquisition of smaller regional firms as a quick and cost-effective way to expand for national firms. "Driven by client demands and our business development needs, we have decided to tap into new markets, extend our national coverage and seek new source of revenues," said Xu.
He also sees the need for smaller regional firms moving up the value chain to access more high-end national and international clients by joining forces with bigger national firms. "We've received many proposals from regional firms to join our firm. They have recognised that they can fast-track the development process by leveraging large national firms' established brands, know-how, resources and client bases," he said.
Of course, downsides to this kind of expansion exist. Xu points out that it requires a large amount of time to fully integrate with merged firms, and the need to control quality can increase the overall cost of expansion.
"We won't expand too fast, as we've realised the issues and challenges that come with merging. But we are aiming to add six branch offices within the next five years," said Xu.
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