This article first appeared on January 23, 2018 in ALB Insights, a weekly, ad-free newsletter that is sent to subscribers.
As the Chinese government’s Shanghai Free Trade Zone (FTZ) scheme – allowing foreign firms to offer PRC law advice in China – turns five this year, and firms like Linklaters and Ashurst preparing to launch there, John Kang speaks to Baker McKenzie’s Hong Kong managing partner Milton Cheng about the firm being the first to take up the scheme and how it’s been so far.
ALB: Baker McKenzie was the first firm to enter into a joint operation (JO) in the Shanghai FTZ. Why did the firm decide to do that?
Cheng: We set up the JO in the Shanghai FTZ for a few important reasons: Clients were looking for us to have domestic capability; we wanted to seize the opportunity when it arose; and the long, good relationship we have with the Ministry of Justice (of the People's Republic of China), as well as with PRC regulators, generally gave us the opportunity to be the first – for which we are thankful.
ALB: One of the biggest decisions for firms thinking of entering into a JO in the FTZ is which Chinese firm to partner with. Why did the firm choose FenXun Partners?
Cheng: We chose FenXun as the right domestic partner for us because of their international mindset and their vision of creating a different kind of Chinese law firm that would be much more international in outlook, strategy, management and culture. The chemistry was good from the start, and we felt that the partners of FenXun would fit well with the Baker McKenzie culture of collaboration and friendship.
With our JO, we are already strengthening both transactional and non-transactional practices to better service the needs of Baker McKenzie's clients investing into China and of Baker McKenzie and FenXun’s clients investing overseas. The Chinese local law capability that FenXun brings is key to executing this strategy. It’s a different strategy from some of the other international firms with a heavy focus on transactions or some that have a particular focus in a niche industry. We are a much more broad practice.
The FenXun team was originally focused on a few transactional areas, but there was a pressing need for other areas of service that our clients demanded, including IP enforcement, disputes, employment, regulatory and so on, where having a strong domestic law capability was a real plus. We have therefore added that capability and more over the past two years.
ALB: The Baker McKenzie FenXun team in the FTZ expanded quickly, from 20 to now about 80. What’s driving this growth?
Cheng: First and foremost, it’s driven by our business strategy. Right now, at a macroeconomic level, China is pushing forward with the Belt and Road Initiative (BRI), and a lot of other things are developing very quickly in China, like the cybersecurity law. So, put simply, the business opportunities are clearly there for those law firms with the right capabilities.
Baker McKenzie is a broad practice law firm with a range of corporate practices – including IP, antitrust, disputes, and real estate. In terms of BRI, when we set up the JO three years ago, we had initially focused on the transactional practices such as M&A and project finance to support the BRI. Since then we've expanded into several other areas to support BRI, as it has become such a driving force in China's global ambitions.
More broadly, we continue to grow our outbound capability in China, which is an area of real strength for our firm, and the best way to do so is to deepen the partner bench. Partner relationships are a key factor in legal procurement in China, and also bring work opportunities to other parts of our business outside China. We’re looking to work with those clients expanding cross-border, to grow our outbound capability and become more of an exporter of work from China to the rest of our global firm.
To contact the writer, please email john.kang@tr.com.
