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Editorial

Overview

Despite headlines about the slowdown of China’s growth, the country’s GDP grew 6.7% in the second quarter of 2016, thanks partly to continued investment by state-sponsored companies. Meanwhile, the Chinese government’s One Belt, One Road initiative has reaffirmed China’s intention to play key roles in infrastructure projects in those countries targeted by the policy, with particular interest in rail, ports and power. The policy has generated a great increase in Chinese outbound activities, including a significant rise in large PPP projects. Another trend is China’s shift towards growing its service-sector industries.

In the field of antitrust law, the Chinese regulators have been active and the latest draft antitrust policy guidelines have led to an increasing amount of IP-related litigation, an enforcement focus which reflects China’s ongoing concerns about its domestic economic slowdown.

In the private equity sphere, several offshore funds recently completed exits involving Chinese buyers or Chinese listings and, despite economic turbulence, the year saw buoyant levels of Chinese outbound financings, especially in relation to acquisitions.

Other busy areas for the country’s lawyers include compliance and regulatory advice; these practices are growing as a result of the keen regulatory scrutiny on money-laundering and fraud. Consequently, corporations are increasingly ensuring that they have appropriate compliance policies and programmes. Elsewhere, restructuring is an active area for employment lawyers, who have also been assisting employers with hiring strategies.

Fangda Partners, King & Wood Mallesons, JunHe LLP and Zhong Lun Law Firm continue to be the market-leading four full-service firms, closely followed by Global Law Office, Grandall Law Firm, AllBright Law Offices, Han Kun Law Offices, Dentons China and Jincheng Tongda & Neal.

That said, the Chinese legal market is increasingly diverse: 2015 saw the establishment of joint operations between Baker & McKenzie and FenXun Partners in the China (Shanghai) Free Trade Zone; the merger of Dacheng Law Offices, LLP and Dentons China; the association between Mayer Brown JSM and Jingtian & Gongcheng in Hong Kong; and an alliance between McGuireWoods LLP and newly launched Shanghai firm FuJae Partners.

Other key legal market news saw Linklaters endure high-profile departures, including Judie Ng Shortell in Beijing and Hong Kong-based Betty Yap, both of whom moved to Paul, Weiss, Rifkind, Wharton & Garrison LLP, while Linklaters’ debt finance partner David Irvine joined Kirkland & Ellis in Hong Kong. At Clifford Chance LLP, former mainland China managing partner Stephen Harder retired from the firm after 20 years and former counsel Paul Wee Ei Don moved to Norton Rose Fulbright as partner.

Elsewhere, Baker Botts L.L.P. hired energy law experts Michael Arruda in Hong Kong and Joanne Du, who splits her time between Hong Kong and Beijing, from Jones Day, while DLA Piper’s Greater China corporate team was expanded with the addition of former O’Melveny lawyers Qiang Li, as co-managing partner of the firm’s mainland China offices, and Stewart Wang in Shanghai. DLA Piper’s own former Beijing corporate head, John Shi, joined Bird & Bird’s Beijing office.

Firms in the spotlight

Cathay Associates
cathayassociates.com

Founded in 2009, Cathay Associates Kejie is a transactional and litigation law firm within a global network, specialising in advising domestic and international leading companies, financial institutions and governments. At first focussing on mergers and acquisitions, securities issuance and capital markets, venture capital and private equity and corporate and foreign direct investment, in 2015 Kejie expanded its practice area to commercial litigation and arbitration. The number of professionals in Kejie has grown from 10 professionals since its establishment to more than 40 professionals currently.

HaoliWen Partners
www.haoliwen.com

A full service firm including corporate and M&A practices, HaoLiWen is also renowned for providing legal advice, defense and/or solutions in very specialized areas, which comprise Trade & Customs, Competition, Dispute Resolution, E-commerce, IP Protection, Corporate Defense and Investigations. With fully centralized and integrated offices and a group of partners with experience as judge, arbitrator, or in-house counsel, and/or practitioner with both domestic and international firms and familiarity with legal risks and issues in China market, HaoLiWen provides clients with practical legal solutions to commercial needs, and thus has won recognition and trust from clients.

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Legal Developments in China

Legal Developments and updates from the leading lawyers in each jurisdiction. To contribute, send an email request to
  • What is the relationship between PPP and concessions?

    From fledgling concessions to PPP that is sweeping the country today, there are two major sets of regulations to be followed: one being regulations for concessions led by the National Development and Reform Commission (“NDRC”) and the other the series of regulations for PPP led by the Ministry of Finance (“MoF”).  However, to date, there is still not one law that expressly defines the relationship between the two, resulting in much confusion and many impediments in practice.  The relationship between concessions and PPP is an issue currently desperately needing clarification.
  • Thought on Developing Convention on Enforceability of Settlement Agreements Reached Through Concilia

    The UN Commission on International Trade Law (“UNCITRAL”) held its 47th session in New York on 7-18 July 2014 and the Author had the privilege of attending the conference at invitation of Mr. Yu Jianlong, President of the Asia Pacific Regional Arbitration Group (“APRAG”). During the conference, the U.S. Government submitted a proposal suggesting Working Group II (Arbitration and Conciliation) of UNCITRAL (“Working Group II”) to develop a multilateral convention with respect of the enforceability of international commercial settlement agreements reached through conciliation (“Enforceability Convention”) for the purpose of encouraging the use of conciliation in resolving international commercial disputes.  Read more
  • Impact of Article 43 of the Commercial Bank Law on PPP Projects

    With the widespread use of the PPP model in China, financing channels for PPP projects have also increasingly diversified.  Bank, trust, fund and insurance channels of capital have all rushed onto the stage of project financing. Subject to Article 43 of the Commercial Bank Law, banks, as the traditional big brother of financing, have always played the role of lender.  In practice, the opinions as to whether they can participate in the bidding on, and contributing capital to, PPP projects as private investors have been mixed.
  • A LOOK BACK AND THOUGHTS ON PPP LEGAL PRACTICE IN CHINA IN 2015

    The current PPP tide in China driven by the Ministry of Finance and the National Development and Reform Commission witnesses the transformation and upgrading of large state-owned enterprises.  These enterprises that have traditionally only been familiar with bid invitation, bid submission, and construction, have started to have an impact on numerous new areas such as project proposal and planning, company establishment and acquisition, fund establishment and operation, etc.  Certain state-owned enterprises that got their starts fairly early have cultivated teams with extensive experience in investing, and certain enterprises that are just starting up are selecting young talent from various entities in all out effort to catch up.  Private enterprises also participate enthusiastically.
  • Transfer Pricing – New Risks in Declaring Price Impact of Special Relationship to China Customs

    China Customs recently requires that the importer or exporter of record declare the impact on the import or export price of its special relationship with the counterpart (“Price Impact”). Specifically the declaring party must state whether its special relationship, if any, would affect the transaction value or price as declared to the China Customs. Previously the special relationship was an item of declaration subsequent to a specific request from the Customs. However, the impact of the special relationship was not an item of declaration, and the declaration party even had a general defense right to disprove such Price Impact. The Price Impact, if any, has been a pre-condition for  the Customs not to accept the declared transfer price for the purpose of ascertaining dutiable price of a given import or export shipment, in which case, China Customs shall re-value the given shipment according to China customs valuation rules.
  • New China Customs Taxation Policy on Cross-Border B2C E-Commerce Imports

    The Ministry of Finance, General Administration of Customs and State Administration of Taxation of China jointly issued a circular (“Joint Circular ”) relating to the taxation policy on the cross-border e-commerce retailing imports, with effect as from April 8, 2016.
  • ICC and CIETAC Arbitration Practice Comparison - Case Study Note 1

    One of the most important negotiated points by parties in contract negotiations is the dispute resolution clause. If parties agree on arbitration, they often negotiate which arbitration institution or arbitration rules will apply in resolving potential disputes.
  • Interpretation of New Anti-monopoly Provisions in the Field of Intellectual Property Rights:

    Ren Qing and Wu Peng, Partners in Zhong Lun Law Firm
  • POTENTIAL CHANGE OF CHINA’S FOREIGN INVESTMENT LAWS AND ITS EFFECT ON VIE STRUCTURES

    By Steve Zhao
  • Zhong Lun Advises Chinese Consortium on $1.9 Billion Acquisition of OmniVision Technologies, Inc.

    On April 30, 2015, OmniVision Technologies, Inc. (OVTI, a Delaware company listed on NASDAQ) announced that it has entered into a definitive agreement to be acquired by a consortium composed of Hua Capital Management Co. Ltd. (“Hua Capital Management”), CITIC Capital Holdings Limited (“CITIC Capital”) and GoldStone Investment Co. Ltd. (“GoldStone Investment”) (collectively, the “Consortium”). Under the terms of the agreement, OmniVision stockholders will receive $29.75 per share in cash, or a total of approximately $1.9 billion. The agreement was unanimously approved by OmniVision’s Board of Directors.

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