35 ASIAN LEGAL BUSINESS – JULY 2023 WWW.LEGALBUSINESSONLINE.COM CHINA FOCUS labour, commercial and company law,” says Lin. “Other forms of regulations include Royal Orders, Council of Ministers Resolutions, Ministerial Resolutions and Ministerial Circulars, all of which are subordinate to Shariah law. At the same time, traditional tribal laws and customs are equally important. The Shariah court system constitutes the basic judicial system in Saudi Arabia and has general jurisdiction over most civil and criminal cases.” Specifically, Lin says that the legal risks of investing in Saudi Arabia mainly exist in compliance, politics, social culture and finance. “First, the Saudi government imposes many restrictions and reviews on foreign investment. So it is necessary to understand and abide by Saudi laws and regulations, especially provisions on foreign shareholding percentages and national security; second, the Saudi region suffers certain risks of political stability, which requires investors to pay attention to changes and policy adjustments in the Saudi political landscape, as well as the measures the government may take in relation to investment.” “Third, Saudi Arabia is a conservative country with a profound Islamic culture. Investors should respect local social and cultural habits to avoid legal risks caused by cultural differences. Finally, Saudi Arabia has special economic conditions, and prices there can fluctuate greatly. Investors, therefore, must watch changes in the global economy and the Saudi economy, as well as fluctuations in the exchange rate of riyal, the local currency.” Therefore, Lin advises investors to gain a comprehensive understanding of local laws, culture, social environment, religious customs, etc., before investing in Saudi Arabia, carefully assess risks, conduct feasibility studies of investment projects, and work with local lawyers to effectively manage risks. The various particularities of the Saudi legal system and social conditions also raise higher requirements for Chinese firms and lawyers that serve Saudi investment needs. To Lin, working closely with Saudi firms and lawyers, and building long-term, smooth communications to understand each other’s work habits, ensure that lawyers can provide clients with high-quality services. FIRST-MOVER ADVANTAGE Besides its commercial market, Saudi Arabia has also liberalized its legal services market. Earlier this year, Saudi Arabia promulgated a new law to encourage foreign firms to set up shop there. According to Lin, a small number of full-service cross-border firms have set up presence in Saudi Arabia. Clifford Chance, Herbert Smith Freehills and Latham & Watkins became the first batch of international firms to be licensed to practice in Saudi Arabia this March. He also says that before the market liberalization, many foreign firms also operated through long-term strategic cooperation with boutique Saudi firms. According to media reports, Saudi Arabia hopes to take advantage of the investment boom to retain large deals locally and create more opportunities for Saudi lawyers. However, a foreign firm must follow a slew of requirements to establish a Saudi office. Examples include that two representative partners must reside in Saudi Arabia; at least half of the lawyers of the Saudi office must be Saudi nationals; business related to Saudi law cannot be transferred to other offices; thirty percent of the revenue obtained by the Saudi office cannot flow outside of Saudi; and the business license must be renewed every five years, among others. International firms are not the only ones who are eyeing the Middle East. According to Lin, some Chinese firms have begun exploring the Middle East, although the market is still small overall. “Fortunately, our firm set up an office in Riyadh, the capital of Saudi Arabia, as early as 2010, and has established a long-term and effective network in the Middle East, including Saudi Arabia, accumulating rich hands-on experience in supporting Chinese companies.” Over a decade of close cooperation with the local legal industry and clients has earned P. C. Woo & Zhonglun WD significant “first mover advantages”. “We are exploring more extensive and closer cooperation with local firms. The fundamental goal is to promote mutual understanding and solve differences in work style and culture to understand the differences in client needs better and provide clients with higher quality services.” BEYOND THE KINGDOM While Saudi Arabia is the largest economy in the region, Chinese companies are also looking elsewhere in the Middle East, and Lin has observed inquiries from Chinese clients about other countries and regions. Among the inquiries, multinational companies interested in the UAE cover a wide range of industries, including wholesale and retail, real estate, financial services and insurance, and mining, among others; the interest in Qatar mainly lands on upstream oil and natural gas development and petrochemical projects; and, for Iran, investors are mainly eyeing crude oil, natural gas, automobiles, minerals, petrochemicals, food and pharmaceuticals. In addition, other MENA countries, such as Egypt, Jordan, Iraq, Kuwait, Syria, Turkey, etc., have also gradually gained the attention of Chinese clients. “Despite the lingering impact of the pandemic, the potential and prospects of the Middle East remain very attractive to Chinese investors. The gradual recovery of the Middle East economy and, in particular, the political rapprochement between Saudi Arabia and Iran under China’s leadership, have created a good political climate for further improvement of the economic environment. The investment enthusiasm of Chinese companies is expected to reach a historical high in 2023.” P. C. Woo & Zhonglun W.D. LLP has accordingly established a new Middle East and Islamic Legal Affairs Department. Considering Dubai’s excellent strategic location in the UAE and its active free trade zone, the firm has sent Li Tao, head of the department, for a series of visits to the Dubai IFZA Free Trade Zone to continue to provide personalized solutions for Chinese companies venturing to the Middle East through professional partners and the government institutional network.