Emerging Markets
- Thread starter Lawgirlxo
- Start date
I can give this one a shot:
- Better serve existing clients looking to do deals in emerging markets
- Win work from new emerging market clients who are increasingly investing in the west
- Develop a presence so when new markets open up (China/India) they are positioned to win work
From what I've read, opening in emerging markets is a useful way of hedging the law firm's business. It can bring in business when legal work in western markets are slow and a lot of emerging markets still have much faster growth rates than our economies, which leads to opportunities for law firms to make money even during global uncertainty.
Your first point is a big one. International companies are increasingly looking to operate in Asia/Africa and to navigate the different laws in those jurisdictions, they need lawyers to advise them. It then makes sense for law firms to follow suit, especially if they want to continue to work. Otherwise, that company may just choose a law firm that does have a presence there.
- Feb 17, 2018
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I think there are great answers already! I don’t really have anything to add, but perhaps it would help if I gave an example.
Let’s take China. China is often seen as the emerging market. It’s the world’s second largest economy. Yet, few firms have been able to crack the Chinese market.
Linklaters has tried. Under its “Project Trident”, the firm has been trying to develop a presence in China for years. Recently, it looks like that has paid off. The firm recently gained Chinese law capability after forming an alliance with a Chinese law firm in the Shanghai Free Trade Zone. Now, Linklaters, according to its website, has over 200 lawyers across China, Shanghai and Hong Kong.
So, to answer your question, what are the benefits of entering this emerging market?
The first two have been explained already. A presence in China benefits a firm's brand and prestige. Linklaters' entrance in the world's second largest economy sends a signal to the market: Linklaters is truly a global law firm. The move also attracts foreign clients looking to invest in China. These businesses need to navigate China's foreign restrictions on acquisitions. They need a law firm to take them through the process, negotiate with Chinese counsel, and help protect their intellectual property.
Thirdly, over the coming decades, China’s outbound investment will rise as the country moves away from an economy driven by cheap manufacturing towards technology and innovation. This is the big reason. Chinese companies will invest overseas. They will compete with international brands and join the global market. This opens the doors for M&A lawyers to advise Chinese companies on their outbound investments.
Chinese banks are also opening foreign branches and providing acquisition finance to Chinese companies. The Chinese currency continues to bigger role in international finance. This offers huge opportunities for banking and capital markets lawyers.
So law firms are investing in China to capitalise on future growth. Now, this isn’t an easy decision and some law firms have pulled out because it currently not very profitable.
There are also other challenges. There were 174 international law firms in China in 2012. Guess how many Chinese law firms were registered in China in 2012? 19,361.
So, international law firms lose out when it comes to numbers. Then there are culture differences, strict government regulations and fee pressures.
But foreign law firms do have a competitive advantage. They are global. They understand how deals are done in Western markets. They know deal structures and how to negotiate M&A documents. That’s attractive to Chinese businesses who want to go global. They may well need the expertise of a firm like Linklaters to acquire a foreign brand that operates across multiple European jurisdictions.
Let’s take China. China is often seen as the emerging market. It’s the world’s second largest economy. Yet, few firms have been able to crack the Chinese market.
Linklaters has tried. Under its “Project Trident”, the firm has been trying to develop a presence in China for years. Recently, it looks like that has paid off. The firm recently gained Chinese law capability after forming an alliance with a Chinese law firm in the Shanghai Free Trade Zone. Now, Linklaters, according to its website, has over 200 lawyers across China, Shanghai and Hong Kong.
So, to answer your question, what are the benefits of entering this emerging market?
The first two have been explained already. A presence in China benefits a firm's brand and prestige. Linklaters' entrance in the world's second largest economy sends a signal to the market: Linklaters is truly a global law firm. The move also attracts foreign clients looking to invest in China. These businesses need to navigate China's foreign restrictions on acquisitions. They need a law firm to take them through the process, negotiate with Chinese counsel, and help protect their intellectual property.
Thirdly, over the coming decades, China’s outbound investment will rise as the country moves away from an economy driven by cheap manufacturing towards technology and innovation. This is the big reason. Chinese companies will invest overseas. They will compete with international brands and join the global market. This opens the doors for M&A lawyers to advise Chinese companies on their outbound investments.
Chinese banks are also opening foreign branches and providing acquisition finance to Chinese companies. The Chinese currency continues to bigger role in international finance. This offers huge opportunities for banking and capital markets lawyers.
So law firms are investing in China to capitalise on future growth. Now, this isn’t an easy decision and some law firms have pulled out because it currently not very profitable.
There are also other challenges. There were 174 international law firms in China in 2012. Guess how many Chinese law firms were registered in China in 2012? 19,361.
So, international law firms lose out when it comes to numbers. Then there are culture differences, strict government regulations and fee pressures.
But foreign law firms do have a competitive advantage. They are global. They understand how deals are done in Western markets. They know deal structures and how to negotiate M&A documents. That’s attractive to Chinese businesses who want to go global. They may well need the expertise of a firm like Linklaters to acquire a foreign brand that operates across multiple European jurisdictions.
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