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Shanghai pioneering Chinese legal reform

Posted by: Laurence Simons 17/03/14

The booming Chinese economy makes it an attractive destination for multinational law firms keen to enter new markets, but the country's relatively draconian regulatory situation has limited the possibilities for this in the past.

However, this could be set to change following the establishment of the Pilot Free Trade Zone in Shanghai, which could indicate a move towards liberalisation of the Chinese legal system, reports the Lawyer magazine.

Shanghai is China's largest city by population with over 20 million people in it, and enjoys a reputation for being more cosmopolitan and internationally-minded than many of its counterparts across the sprawling country.

It opened a new type of free-trade zone last September, acting as a test run for the opening up of the financial system, easing restrictions in foreign and private investment, and loosening currency controls.

In theory, this development could allow for better collaboration between foreign and local firms, making it easier for the two groups to associate together.

Dechert's China managing partner Tao Jingzhou described the ongoing changes as "encouraging" for legal experts working in the country.

"Many other countries in Asia have already opened their doors to international firms, such as Japan, Korea and Singapore. The timing is right for China to show that it has an open-minded leadership in the legal professional field," he added.

This development is long overdue and can provide benefits to domestic companies as well as their foreign counterparts, he added.

"The local and international legal communities have mingled and mixed so much. Many Chinese firms have become really international and I can't see why we can’t have a mixture of operations with Chinese and foreign lawyers working in the same partnership," concluded Mr Jingzhou.

Frank Chen, managing partner of Shanghai-based Chen & Co, added that internationalisation is something that local firms are keen on as they attempt to develop their global business base.

It will make it easier for them to bring in talented foreign lawyers, he explained.