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Shenzhen, the southern mainland city home to the pillars of the country’s strategic high-tech sector, has been increasingly gaining favour from China’s policymakers, and international law firms have begun to take notice.

The metropolis has been tapped to spearhead the innovative and technological engines of the Greater Bay Area (GBA), an 11-city megalopolis aspiring to become Asia’s Silicon Valley with a combined GDP nearing $1.83 trillion in 2022.

It has drawn U.S. tech giants looking to gain a slice of the lucrative Chinese market. Chipmaker Intel, for example, recently shrugged off souring China-U.S. ties and de-risking calls from Washington to partner with six Shenzhen tech firms focusing on AI, chip applications and edge computing, among other technologies.

The deteriorating geopolitical climate and regulatory uncertainties have, however, had an impact on domestic firms. Shenzhen-based tech companies, such as internet giant Tencent and drone manufacturing champion DJI have been facing regulatory headwinds fanned by rising Sino-U.S. competition. With national interest on the line, the tech war is only intensifying with the world’s top economies racing to edge out each other in developing sensitive technologies, including artificial intelligence and semiconductors.  

As a result of the growing need for legal advisory to navigate the complicating regulatory landscape and the tit-for-tat sanction regimes, law firms with strong TMT offerings have been mulling to establish a ground presence in Shenzhen to serve high-flying tech clients. Upon approvals from China’s Ministry of Justice in July, Morgan Lewis and Holman Fenwick Willan (HFW) made the first moves towards setting up in the southern powerhouse.

Headquartered in Philadelphia, Morgan Lewis has picked Shenzhen to set up its fourth office in China, which will be helmed by partner Zhu Shaobin to expand the firm’s IP offerings, including patent and trade secrets disputes, in China.

Aviation and insurance powerhouse HFW, based in London, has appointed aircraft finance partner Justin Sun to lead not only the firm’s third office in China, but, more notably, one located in the much-hyped Qianhai special economic cooperation zone.

Beijing has been showering Qianhai with preferential tax and legal frameworks, aiming to build it into a professional service centre to facilitate the GBA’s rapid development. The strong policy commitment has prompted a string of insurance firms, family offices and private banks to enter the area.

“Being the first UK-based law firm to be granted approval to set up office in the GBA, we remain at the forefront of GBA trends and developments. Having an office right on our clients’ doorstep in the heart of the GBA reinforces our commitment to our clients in the region, whilst gaining access to the rest of the GBA and beyond,” Sun tells ALB.

“While providing day-to-day services to our clients, we take a proactive approach to assist our client in areas such as sanction, compliances, which are important for international business,” adds Sun.

HFW attained the greenlight to set up shop in Qianhai after a number of lawyers in its Hong Kong office passed the GBA Legal Qualification Examination, enabling them to advise on commercial matters in the bloc. These GBA-qualified lawyers “will play an important role” in the development of the Qianhai office, while any local recruitment and staffing will be “clients-driven”, according to Sun.

Industry observers are optimistic about the competitiveness of international law firms gaining or eyeing a foothold in Shenzhen.

“International law firms establishing a presence in Shenzhen can benefit from the proximity to the clients they serve. These firms typically have specialised teams in the intellectual property (IP), tech and commercial practice or have a focus on the technology sector,” says Brian Chan, director of legal and governance at executive recruitment firm Ethos BeathChapman.

He adds: “International law firms have a competitive edge due to their global platform and expertise across different locations in handling multiple jurisdictional matters, particularly those involving the EU and U.S. jurisdictions. They can also utilise international resources and provide better internal mobility across regions.”

With more international firms potentially flocking to open offices in Shenzhen to tap the rising economic opportunities, recruitment experts expect some extent of shakeup of the domestic legal talent pool.

“After making senior appointments, as we have seen in Shanghai and Beijing, international law firms will then look for local talent with experience from domestic law firms for associate-level hiring, prioritising those with strong language abilities,” says Chan.

But Chan cautions the prospective overseas entrants against potential hurdles when staffing their new offices in the mainland tech hub.

“We have observed a shortage of talent with both the necessary skill set and language proficiency. Strict regulations and visa issues across the border still pose challenges for overseas talent,” he says.

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