HOPSON DEVELOPMENT Holdings Limited recently acquired a 60.98 per cent interest in Dongfangwenhua International Properties Company Limited, a company engaged in a property development project in the PRC. Hopson was represented by the Hong Kong office of Jones Day, with partner Barbara Mok and associates Nancy Lau and Cynthia Hu working on the deal.
Hopson, listed on the Hong Kong Stock Exchange, is a leading real property developer in Hong Kong, specialising in mid to high-end large scale residential, and was looking to expand into a “a new area of development” in the PRC, said Mok. Dongfangwenhua is based in prime locations in Beijing, and features facilities for cultural performances and hotels.
Unlike the usual practice in Australia, Jones Day lawyers were dealing with Dongfangwenhua executives rather than lawyers or in-house counsel.
“It’s often the case that in China companies tend not to go to lawyers if at all possible,” said Mok. “It makes things more difficult for us, as we aren’t dealing on the same terms sometimes. It’s really more time-consuming.”
Mok also detailed the challenges of working with a party in the PRC, which although moving towards a market economy, still sees occasional intervention from the central government, particularly in real estate development. “It’s very difficult to keep pace with new policies, which may not be clear-cut laws and regulations, but with which we have to comply. And the implementation of those policies may differ from province to province.”
At the same time, the Jones Day team had to follow Hong Kong stock exchange rules. “We had to make sure the acquisition followed necessary disclosure rules, even though it was taking place in the PRC,” said Mok.
The total financial commitment of Hopson for the transaction was RMB 795.58 ($134.72) million, of which RMB 395.88 ($67.04) million was the aggregate paid by Hopson for the acquisition. The other party involved in the transaction was Beijing Huaxia Chuang Ye Real Estate Development Company Limited, which sold the interest in Dongfangwenhua to Hopson.