'A prototype for international firms in China' – Bakers' China head on its Shanghai venture

A high-end local law practice, as part of an international network platform, is the tried and tested Bakers play

“We have been pleasantly surprised at how supportive the PRC Ministry of Justice and the Shanghai Justice Bureau have been,” says Cheng. “They look at the Baker & McKenzie-FenXun joint operation as a prototype for joint ventures for international firms wanting to grow in China.”

Cheng says the business is going well so far, with a number of companies changing their PRC counsel from established Chinese firms to Bakers.

One example of work won by the firm as a result of the operation is its role advising Osram on the company’s disposal of 13.5% stake in Foshan Electrical and Lighting Co for $350m. The team advising on the deal was jointly led by Bakers corporate partner Tracy Wut and FenXun corporate partners Wang Yingzhe and Wen Jianli.

Joining forces
The firms have also developed a joint strategy for growing their businesses. Cheng says: “We are well positioned to grow as Asia and Asian-headquartered multinational corporations of the future grow. We plan and invest for the long term; not everyone is willing to do that. We have the commitment to play the long game.”

The strategy is has three core strands; continue to build a high end Chinese domestic capability, build a cross-border capability and an increased focus on China outbound work.

The first strand involves developing the operation’s existing Chinese capabilities into new practice groups and sectors. The firm has recently added intellectual property to its offering, and according to Cheng is planning to expand further to bring its Chinese capabilities in line with Baker & McKenzie’s global strengths.

Although he will not be drawn on which areas this may cover, Cheng names tax, compliance, real estate and disputes as global practice strengths of the firm.

Cheng says building up the firm’s cross-border capability is a focus in order to bring the joint operation within its overarching aims in in the region, taking advantage of the firm’s “long-established Asia-Pacific platform”. Currently the firm has a presence in 12 jurisdictions across Asia-Pacific including three in China.

Recognising the change in direction of China investment from inbound to outbound, growing this area of work is the third priority for the joint operation. Cheng notes that in order to achieve the desired increase in outbound work the firm has to concentrate on joint pitches and growing origination through the Baker & McKenzie-FenXun platform.

Three pronged attack
In addition to the three core strands of the strategy, attention is also being paid to the integration of the two firms, both internally and taking the brand to the wider market. Cheng comments that for FenXun partners it is a gradual process of making sure they are actively aware of the opportunities Bakers’ platform gives them.

Within the next three to five years, our ambition is for the brand to be up there with the best-known high-end PRC law firms

Cheng says the firms have been able to cooperate in areas beyond specific mandates, including training, business development, branding and also social activities, with the firms set to team up for for a joint office retreat for Chinese New Year.

Looking at the wider market, the focus is on building name recognition with clients as a firm which is able to offer both a strong international platform as well as a domestic one.

On what the joint operation will look like in the next few years, Cheng has a clear aim: “Within the next three to five years, our ambition is for the Baker & McKenzie FenXun name and brand to be up there with the best-known high-end PRC law firms.”

This is not a modest goal. Cheng himself cites the competitiveness of PRC firms as the biggest landscape change, and there is no question that this trend is set to continue. And it is not only the PRC firms who pose strong competition to Bakers’ aspirations; it is no secret that a number of top international firms are considering their options in China. This, however, does not daunt Cheng.

“Linklaters saying it is following a similar strategy validates what we did and why we did it,” he says confidently.

“We welcome competition and believe the China market is more than big enough for us and our peer firms to operate in. I would be a little bit worried if we were still the only one with a joint operation three to five years from now.”