36 Asian Legal Business | October 2024 This shift has led to a broadening and deepening of services provided by Chinese lawyers in supporting global expansion. In the past two years, Global Law Office’s Shenzhen branch has primarily supported clients in sectors such as manufacturing, mining, infrastructure, new energy and agriculture. Their focus has evolved from traditional outbound investment services to addressing overseas needs, including local company registration, corporate governance, labour law, intellectual property, taxation, and customs. The firm notes: “Clients increasingly expect Chinese lawyers to lead in coordinating with overseas partners for routine cross-border contracts, compliance, trade and pre-investment legal matters. Beyond coordination, Chinese lawyers are also providing advanced legal services in areas like tax planning, cross-border IP, data export compliance, and dispute resolution.” Lin emphasises that the current wave of “comprehensive overseas expansion” by Chinese companies necessitates a new legal services model, as the traditional approach of Chinese firms collaborating with local firms in host countries is no longer sufficient. He explains: “As Chinese companies grow into new-generation multinational companies, they require support in building cross-border legal, financial, taxation, and organisational structures that meet global standards. Multinational companies must consider where to establish their overseas holding platforms, operations centres, finance hubs, supply chain networks and IP centres, making optimal arrangements across different jurisdictions. These structures must align with both the holding platform and host country’s regulations, considering factors like fundraising ease and future exit strategies.” To meet these evolving needs, East & Concord has assembled a specialised team in its GBA office, comprising eight partners and over 20 lawyers, to advise on overseas expansion across various fields and regions. In 2023, the office introduced comprehensive “one-stop legal, commercial, financial and tax services” to support companies expanding abroad. Lin notes: “In particular, since Internet companies are exporting their business models from Mainland China to overseas markets, integrated legal, commercial, financial and tax services can provide clients with comprehensive solutions that are feasible in business model, legally compliant and optimal in tax planning.” He adds that East & Concord’s overseas deal-making team now includes three senior consultants, each specialising in financial, taxation and business model consulting. “They all served as partners in the Big Four accounting firms and can work closely with lawyers to provide services integrating legal, financial, tax and organisational structure aspects for companies expanding overseas.” Hong Kong’s gateway role What role does Hong Kong, an important gateway to China in South China, play during this wave of “going global?” According to Lin, leveraging its resource ties with the Mainland, low transaction and tax costs as a mid-shore location, and convenience for fundraising as a financial centre, Hong Kong “has always been an irreplaceable choice for Chinese companies to set up holding platforms for their overseas expansion, and is expected to play an ever more important role”. Since 2023, Lin has noticed a slew of policies introduced by Hong Kong to attract private enterprises, such as family office policies, tax incentives and the recent “patent box regime”. This regime refers to a form of tax incentive where relief can be granted on profits derived from eligible IPs created through R&D activities in Hong Kong. Lin notes, “This can attract Mainland companies to establish R&D and IP centres in Hong Kong, and further entice Chinese companies venturing overseas to set up holding platforms in the city.” Global Law Office similarly points out that the structures of many overseas Greater Bay Area expansion projects still use Hong Kong as the first overseas layer to connect domestic companies and their overseas outfits, “and many times Hong Kong companies act as either the acquirer or the target. Accordingly, Hong Kong law and Hong Kong litigation and arbitration have increasingly become the governing law and dispute resolution methods chosen by domestic companies for overseas expansion projects.” Consequently, the firm has developed relevant one-stop legal services, covering registration and routine compliance, legal due diligence of Hong Kong companies, issuance of Hong Kong law opinions, transaction-level advisory based on Hong Kong law, and subsequent dispute resolution. “In addition, the revision and introduction of fund-related regulations in Hong Kong in recent years has also attracted many Mainland investors to set up funds in Hong Kong as investment and financing platforms, which has to some extent increased demand for legal services for fund establishment in Hong Kong,” adds the firm. Liu, however, acknowledges that although Hong Kong maintains its hub status, Singapore has begun to divert some projects in the past two years and has even “become another important option for Chinese companies in structuring their overseas presence”. “We are still keeping a close eye on this, and it is not yet clear whether this will become a long-term trend. The problem with Singapore is that its market is not large enough and the capital market cannot accommodate too much capital. In terms of legal services, Singapore’s ‘Big Four’ firms enjoy certain advantages thanks to their comprehensive service networks throughout Southeast Asia, but the legal systems of the region are very complex, and setting up investment platforms in Singapore does not respond to this complexity very well,” says Liu. Therefore, he concludes, “funds flowing out of China may stay in Singapore for a while, but will eventually flow to other Southeast Asian countries”, so
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