Where East meets West
Shanghai has experienced rapid development in recent years – and these changes have opened new opportunities for foreign lawyers.
As the financial hub of the People’s Republic of China (PRC), Shanghai has undergone a breathtaking metamorphosis in the last few decades. Few other cities in the world have been able to sustain transformation at the same dedicated tempo of Shanghai’s industrial rhythm.
Yet while rapid steel constructs and concrete ambitions have stretched the city’s skyline out and upwards, a traditional undercurrent still runs deep.
With China’s investment booms and economic trysts, the appetite for lawyers’ work has grown and a steady flow of foreign lawyers have moved to Shanghai to fill its many offices. The signing of last year’s China-Australia Free Trade Agreement has also highlighted new possibilities for Australian lawyers who hope to work in the region.
The nation’s business centre has long been regarded as the place where East meets West, acting as a trade port for silk and tea at the turn of the century. Today, it is a unique melting pot of traditional sensibilities, urban culture and sophisticated business.
Banking on the future
According to King & Wood Mallesons international partner Will McCosker, all major international companies who want to do business in China start in Shanghai.
Mr McCosker, who specialises in international funds and investment structures, has been based in his firm’s Shanghai office for more than 18 months.
“Internationals will use Shanghai as their first port of call, and KWM has really followed the market in focusing that way,” Mr McCosker says.
“A lot of the multinational companies are headquartered in Shanghai. It is the financial centre of China. All the international banks are often headquartered here, whereas all the major SOEs and large domestic companies tend to be headquarted in Beijing,” he adds.
After stints abroad working in London and the Cayman Islands, the Australian lawyer’s relocation to Shanghai meant moving to another major funds jurisdiction.
Mr McCosker’s arrival in China was part of his firm’s plan to respond to a burgeoning investment landscape.
“My role here was to build out our China fund expertise and our regional funds expertise and profile,” he says.
“My practice area is part of the increasing role that China and many Chinese institutions play in the global investment landscape and about tapping into the opportunities presented by those macro developments. There are Chinese lawyers who play in this space and my relocation was to bring additional international expertise to the Chinese team.”
The vision of Shanghai as the epicentre of China’s financial wheeling and dealing is shared by Ashurst Shanghai managing partner Michael Sheng. By his estimation, Australian lawyers represent a healthy 20 per cent of the fee-earning headcount in his office. An Australian-educated Shanghai native, he enjoys an especially unique vantage point.
As a graduate who entered into the foray of corporate law in Melbourne, Mr Sheng could see emerging signs of promise in China’s M&A space. He credits his business intuition and calling for adventure for bringing him back to his motherland over 10 years ago.
“In about 2005 I observed that there were a lot of corporate activities, mainly from inbound foreign investment into China and I saw a lot of foreigners going to China to work. For me the decision wasn’t very hard to come back and see if I could carve out a career for myself in China,” Mr Sheng says.
Calling the move “as much a career plan as an adventure”, he suggests the foreign investment pouring into China provided a rich opportunity.
Today, he believes the market has shifted towards favouring outbound investment. “Our practice at Ashurst is half inbound, half outbound work. We serve premium clients and financial institutions on the more inbound work and help Chinese investors offshore. But it’s probably the outbound work space that we will see the more growth opportunities there,” he says.
Rising to the challenge
Mr Sheng moved with his parents to Victoria from Shanghai at the age of 12. He points to a growing cohort of lawyers like him, foreign-educated, multi-lingual and alive to the culture of China, whose growing presence in law firms has made competition among international colleagues fierce. Today Mr Sheng is the managing partner of the Ashurst office in Shanghai.
“Nowadays I think for any foreign lawyers to work in China, it’s important to have Chinese language skills. It was less important before, but much more important now. Ideally, you will have a fairly high level of Chinese proficiency.
“Beyond language skills, I think foreign lawyers need an understanding of the culture and the ability to embrace it,” Mr Sheng says.
Looking back, he suggests 10 years ago most PRC-qualified lawyers would not have been trained internationally or held degrees from outside China, giving foreign lawyers an edge.
“But these days, there are many PRC-qualified lawyers who are internationally trained and have degrees from the US or the UK or Australia,” he says.
“For foreign lawyers to come and work in China who want to be competitive, I think they need to bring more than just international experience because PRC lawyers have that as well.”
Lawyers operating in Shanghai must also be able to draw on an established local network, Mr McCosker suggests. He points to the unique cultural context propping up regulatory requirements as something that demands a particular local appreciation.
“I think there are challenges to somebody coming to this market cold that are more substantial than in other markets.
“You just have to be hungry for knowledge and try to plug into your Chinese connections as much as you can to build up your local knowledge,” he says.
“[As a foreigner] it’s harder to understand the lay of the land because a lot of the relevant requirements are not ‘law’ but ‘lore’, and regulator positions might not be clearly described, they might be more fluid.”
Mr Sheng advises foreign lawyers to adopt a pragmatic approach, despite some of the challenging realities that business in China poses.
“Certain things are done differently in China or there may be certain powers exercised by the authorities that can be different from how the administrative bodies exercise discretion overseas and this has a lot to do with the history of China and how it has evolved over the years,” Mr Sheng says.
“Instead of just criticising efficiencies or lack of efficiencies you have to accept that this is the way that things are done here. Things have improved over the years in that respect, so my advice is just to embrace and accept it rather than feel negative about it all the time.”
In the fast lane
Aside from pragmatism and patience, both lawyers agree that people contemplating a move to Shanghai should sample their taste for the fast pace of business and life.
“I recommend that people should holiday here first to familiarise themselves with the city. Moving to China for work is not really a three-month or six-month plan. If you want to work here, it’s like a two-year-plus commitment,” Mr Sheng says.
In particular, he believes Shanghai may feel crowded to some people, with traffic congestion and fast-paced activity on all sides.
“Newcomers may find it difficult to find where things are. It is probably one of the most dynamic cities in the world – fast developing as well. There is a lot happening all the time,” he says.
Shanghai is also a “huge market”, he warns, meaning the market can be ruthless.
“There’s a lot of competition for work simply because everybody is here – you’ve got US, UK, Australian, French, German, Japanese firms – and on top of that you’ve got the PRC local firms.
“But if you’re a lawyer and you have the ambition to go international, it’s good to try these things when you’re young.”
While still a fairly recent arrival, the experience of China for Mr McCosker is as intriguing as it is different.
“It’s still a new culture to me; just the sheer size and energy of the city. And there’s a real sense of development and growth with new high-tech buildings sitting next to older style architecture,” he explains. “Shanghai is hands down the most international of the Chinese cities and it’s a very livable city.”