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Although China's oil and gas sector experienced fewer of the state-owned enterprises’ (SOEs) big-ticket deals of recent years, as SOEs dealt with internal reform and restructurings, Chinese companies expanded overseas through investments into new sectors, such as hi-tech, agribusiness and food, real estate and manufacturing. Moreover, China’s One Belt, One Road initiative, linking China with Europe and every country in between, means that outbound investment from China will continue to develop.

On the inbound side, a landmark change in China’s foreign investment regime is eagerly awaited by lawyers; China is pushing ahead with an economic reform that aims to attract private investment in its SOEs by 2020. Its Ministry of Commerce recently released the Foreign Investment Law draft, which is intended to replace existing Chinese laws and regulations on foreign investments; this is expected to have a significant impact on how foreign capital enters China and generate lucrative inbound instructions.


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The real estate sector remains one of the most active industries for private equity deal-making in China, but the Chinese private equity/venture capital market has changed in nature, with run-of-the-mill Series A venture capital financings increasingly dominated by domestic firms and smaller international players. Consequently, some foreign law practices have largely exited the venture capital market and now focus on handling more complex, latter-stage deals.

Many international law firms are actively developing their dispute resolution practices, particularly in relation to anti-corruption and investigations. International arbitration is also buoyant, with Chinese parties increasingly involved in arbitrations seated outside China; consequently, the Hong Kong International Arbitration Centre (HKIAC) and Singapore International Arbitration Centre (SIAC) have been marketing heavily into China.

Nevertheless, several foreign law firms are reportedly struggling to turn a healthy profit from China’s aggressively competitive legal market as a result of extremely competitive pricing wars; resultantly, several US and UK head offices have reduced their mainland China presences, and Fried, Frank, Harris, Shriver & Jacobson LLP closed both its offices in Hong Kong and Shanghai in 2015 because fees had dropped dramatically in recent years.

Others remain keen to expand in mainland China; multinational law firm Dentons and China’s largest legal practice Dacheng Law Offices, LLP merged to create the world’s biggest law firm. The combined firm utilised a Swiss verein structure, allowing for distinctive regional profit pools and accounting, while sharing strategy and branding. Dacheng Law Offices, LLP remains a separate practice within the united entity’s verein, because China prohibits foreign law firms and lawyers from practising Chinese law.

On the PRC firm front, Fangda Partners, King & Wood Mallesons, Jun He and Zhong Lun Law Firm held their dominant positions in the domestic legal market, although other local firms are also notable for their size and expertise: AllBright Law Offices, Han Kun Law Offices, Llinks Law Offices and Global Law Office are all key players. Significant personnel moves saw King & Wood Mallesons enhance its dispute resolution team through the arrival of numerous well-regarded practitioners with High Court and The Supreme People’s Court experience; and Han Kun Law Offices expand its Shanghai practice by recruiting eight partners from AllBright Law Offices. In addition, Fangda Partners’ hired antitrust specialist Michael Han, from Freshfields Bruckhaus Deringer.

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Legal Developments in China

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  • 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.

    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

    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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