2024 Regional Roundtable Update: China
2024 China Regional Update
Firm Name: Zhong Lun Law Firm
Authors: Bo Cheng, Tianshun Liu
1. How is the political environment impacting business in or with your country?
In the context of Western Countries' derisking proposal for the Chinese supply chain, many Chinese companies are contemplating setting up an alternative entity for their global business. Most Chinese companies will set up their global headquarters in Singapore while conducting business operations/building factories in Malaysia and Vietnam. The substantial amount of PRC outbound investment flow into SEA/Europe is generally conducted through strategic acquisition/joint venture/greenfield investment.
2. Which countries have you previously collaborated with and do you see potential for future collaboration with on cross-border matters within the region?
We cover most developed countries and emerging markets along the Belt and Road Initiative. Recently, the hot spots for Chinese companies include Vietnam, Malaysia, Thailand, and Indonesia in SEA.
For Malaysia and Vietnam, almost all the manufacturing industries' companies would like to expand their business there; we have extensive cooperation with the firms across the board.
For Indonesia, there are more mining deals.
For Singapore, because a substantial number of target assets set up their Holdco in Singapore, SG law has become more and more frequently used in those transactions. We will also need to work with local counsel there.
To conclude, given the trend of Chinese companies' overseas expansion ambition, there will be a lot of opportunities for Chinese lawyers to collaborate with SEA lawyers.
3. What legislation has recently changed or is changing that a potential international client should be aware of?
The State Council of China promulgated two circulars respectively in July 2023 and February 2024 to optimize the foreign investment environment in China. The two circulars point out that China intends to, among others, (i) intensify the introduction of foreign investment in key areas, such as gene diagnosis and therapy, (ii) reasonably narrow the scope of the negative list for foreign investment access, including comprehensively canceling restrictive measures on foreign investment in the manufacturing sector, and continuously reducing foreign investment limits in telecommunications, medical care, and other fields, and (iii) further implement pilot programs of domestic investment by qualified foreign limited partners. However, it remains to be seen if relevant government authorities are to issue supporting rules to implement the measures set out in the abovementioned circulars effectively.
The Convention on Abolishing the Requirement of Legalisation for Foreign Public Documents ("Hague Convention") came into force in China in November 2023. The Hague Convention provides great convenience for legalizing transnational public documents, effectively simplifying the previous cumbersome procedures. Foreign investors intending to invest in China are not required to complete consular certification for their commercial documents. Instead, upon obtaining certain certificates issued by the competent authorities of their country, such commercial documents may be sent to China for use.