5 ASIAN LEGAL BUSINESS CHINA • 亚洲法律杂志-中国版 WWW.LEGALBUSINESSONLINE.COM/CHINA BIG STORY MARCO CHUNG, group head of legal and managing director, CLSA: GC’s role has always been about being a solution provider to the business and assessing the associated risks. Whilst the type of relevant risks evolves over the years, most strikingly in recent years, geopolitical risks almost trump everything else in big decisions. This is especially so when it comes to capital allocation decisions, which could take years to general return, and the geopolitics could change dramatically during this period. This risk could present itself in different shapes and forms, such as data law, privacy law, national security law, foreign investment law, sanctions law, and others. So, in order to assess the direction of various laws, understanding the geopolitics between the countries is important. Whilst there is no one size fits all approach, awareness, and education of these issues at the Firm are key, especially since most people are not historically accustomed to thinking of these issues when making business decisions. Even our lawyers need to see beyond the most immediate black letter of the law. This can be achieved in a couple of ways. Firstly, sufficient training at the Firm from top to bottom, so hopefully, this gets factored into their decision-making. Secondly, given that our lawyers would typically be across all key transactions and decisions, I would expect them to be the gatekeepers and flag these issues when they see them. Thirdly, I would expect us to bring in an external consultant when the issue is sufficiently thorny. I am increasingly seeing non-law firms, which are staffed with former government officials to provide these consultancy services. In my view, to successfully navigate this, the calculus in people’s decision-making will need to evolve. DANIEL LO, chief legal officer, Cake Group: Operating within the nascent Web3 industry means we are highly susceptible to geopolitical events, especially with crypto regulation and markets. This is especially so since the fallout from FTX, Terra Luna and Three Arrows Capital. Staying updated on upcoming digital assets legislation in key web3 jurisdictions such as the U.S., EU, the UK, Hong Kong, and Singapore is an ongoing task that my team and I undertake to decide on digital assets licensing plans. Developing and nurturing relationships with financial regulators, Web3 lawyers and compliance professionals, and industry associations is vital. Not only does it grant me insight into where the market is headed, but there is strength in solidarity when responding to regulators on proposed regulations with industry players. This is important because our input now can have an impact on what becomes industry standards going forward. All this information feeds into how I approach the next few years of legal strategy in uncharted waters, especially considering a company’s ambitions to expand globally and pursue a potential public listing. Deciding on whether to actively market a decentralised finance product in a jurisdiction or listing a particular token that may be scoped as a security is a constant challenge as governments and regulators decide on their stance. Learning how to balance the likelihood and severity of enforcement against the potential to succeed with a blue ocean strategy is a part of the regular risk consideration that a legal strategy for a Web3 company must include. YI WONG, general counsel, Lum Chang Holdings: First and foremost, one must put into perspective that the Sino-U.S. tech war is but a chapter in the larger looming prelude of a “cold war,” driven by both parties’ diametrically opposed political systems and associated values. This is further compounded by each side’s sense of exceptionalism, and a clash in pragmatic strategic ambitions. Specifically on technology, the limitations and restrictions in investments in technology, and declining cooperation between parties will translate to less compatibility of tech systems, differing sets of compliance checklists, which in turn give rise to uncertainty and higher business costs. As lawyers, it affects all levels and layers of the value chain - from critical security infrastructure to general supply chains to transnational payment systems, to specific industries (e.g., agritech, greentech, AI, biotech, etc.). So, in terms of procurement, vendor selection and management, and executing contracts in such scenarios must allow for flexibility in exiting (if not technically feasible to carry on), step-in rights to be thought through and costed in carefully, and ancillary business continuity plans to cater for these seismic shift possibilities too. We must also regularly screen ever-changing sanctions lists, and the resulting steps to be undertaken if a counterparty our organisations work with becomes untenable. Ultimately, one must acknowledge that geopolitical risks are here to stay and become a new reality of constant. Thus, as lawyers, we must brace for more export controls, sanctions and economic warfare affecting international risk exposure (currency control, taxation treaties being withdrawn) and bear these in mind when advising on transactions. Also, navigating the geopolitical situation moving forward requires a lawyer to have increased DANIEL LO YI WONG WINNIE MA MARCO CHUNG
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