We recently spoke with Zhengyu Tang, chief representative of Sidley’s Shanghai office, and Joseph Chan, a partner there, who each discussed the business landscape in Shanghai and plans to further enhance the firm’s already formidable legal services in Asia.
What first led you to Sidley?
Zhengyu Tang: I joined Sidley in 2002 after running the Shanghai office of another international firm based in the UK. Before making the move, I had noted the growth of U.S. firms in Shanghai, with Sidley being one of the best known on the landscape. At the time, Sidley did not have a resident partner in Shanghai, so that piqued my interest. It was one of the many reasons I decided to join the firm and head up its office here.
Joseph Chan: I joined Sidley four years ago in our Shanghai office. I was drawn by the firm’s global reputation and committed, mature platform in Asia. The firm has been continuously on the ground in Asia for more than 30 years, and almost 20 years in China. I also found the diversity of our practice and the size of the team in Asia to be impressive, including that Sidley had three offices in China—in Beijing, Shanghai and Hong Kong. To me these three cities form an integrated whole in the China market. When, increasingly, my clients asked me about capabilities in Hong Kong and Beijing, I realized I had to move to a platform that could more adequately serve my clients’ interests. The development of my practice since joining Sidley has confirmed my belief.
How have Sidley’s legal services evolved in Shanghai?
ZT: When I first joined, some of the international firms operating in China were experiencing a boom. At the time, those firms had opted to grow rather aggressively in size. By contrast, Sidley was more conservative in its business strategy. Our offices in Beijing and Shanghai haven’t grown beyond 30 or so lawyers in total. Ultimately, that decision has been a wise one: We are more stable than most other international firms here. So although we didn’t enjoy the big growth some initially experienced, those big-growth firms have had to scale back in recent years.
Initially, probably 80 percent of our transactions were limited to China, although we always represented U.S. and European companies with regard to their China investments and operations. I think more than 50 percent of our transactions are now global transactions with significant China links. So in that way we are now more integrated into the firm’s global deals.
JC: Our office has always served multinational clients investing in China, and this remains a very important focus for us. Initially such investments are predominantly green-field investments. As the Chinese economy matures, more notable local companies become attractive as targets of acquisitions. So we began to act for multinational clients in their inbound M&A transactions in the region. What’s increasingly happening now is the outbound M&A activities of our China-based corporate clients, both major state-owned enterprises and privately held companies. They have become active in the U.S., Europe and elsewhere. We are seeing increased opportunity and are focused on cultivating these prospects.
Another strength of our office is in the private equity and venture capital arena. We act for a variety of international funds with respect to their investments in emerging growth Chinese companies. These Chinese companies span the spectrum of industries, from e-commerce to consumer products to healthcare, to even some alternative energy.
A third strength would be representing international hedge fund clients with respect to their entry strategies and operations in China. An important milestone to note is our involvement with Canyon Capital Advisors—one of our important U.S. hedge fund clients– in a new fund raising initiative in Shanghai. We were involved in their pioneering effort to secure a license to raise a local RMB denominated fund in China. This is the first time international hedge fund managers are permitted to raise capital from the local investors in China for investments in the international secondary markets.
I should also mention that we have a very active Hong Kong IPO practice out of the Shanghai office. Tony Jacobsen is our principal Hong Kong IPO partner here. He works very closely with our Hong Kong IPO team.
What are some of your strategic plans for the office in 2015?
ZT: Our goal is always to strive to do more work for the firm’s major clients. Sidley is such a successful international firm with a strong client base in the U.S. and around the world. We feel we should maximize on the inherent opportunities this affords us.
When I first joined the firm, the Shanghai office got five or so referrals, annually, from other offices. We have successfully built that up to 30 or so referrals. So we can always do more to highlight our capabilities and resources in China, letting clients know about our China-specific deals or China aspects of global deals.
JC: I would also add that we want to continue to grow our M&A and private equity practices, which dovetails with Sidley’s firmwide expansion. In the last couple of years we have brought in M&A and private equity teams in New York, Dallas, Beijing, Houston, Hong Kong, and Singapore.
In thinking about your practice and the breadth of matters you handle, what is most interesting to you, personally?
ZT: I think our work is gratifying in the sense that although we have a small office here, we are exposed to a wide range of matters. I focus my practice on inbound investment, M&A, China regulatory and U.S. FCPA compliance, representing international investors with regard to their China investments, operations and investigations.
JC: The one I would note is our representation of a major China-based private equity fund in their investment in a U.S.-based healthcare company two years ago. The transaction was named Private Equity Deal of the Year by the China Business Law Journal in 2013. It brought to bear a team of lawyers from across the firm’s offices, and touched on our life sciences, M&A and private equity capabilities. Lawyers in Beijing, Shanghai, Palo Alto, Dallas, Washington, D.C. and Brussels all collaborated on the work—a cross-office, multidisciplinary team that worked across three continents. We were selected by the client because of our China private equity team and our very strong life sciences regulatory experience in the U.S. and the EU.
How would you describe the atmosphere in the office?
ZT: The working relationships—the partner-associate relationships and associate-to-associate relationships—have always been very warm and professional. All of our associates who have left the firm to move in-house or to join firms, are always impressed with the days they spent here. That’s something the members of our office feel particularly proud of.
What are some of the unique recreational events your office has held?
JC: For the past few years, we have sponsored the J.P. Morgan Challenge. This is quite nice because the vast majority of the office participates. It’s a charitable 5K run that attracts most of the banks and financial services firms, along with their corporate clients and service providers in Shanghai. It’s a very prominent event attended by thousands of people.
Last year, for the Chinese New Year, we did something quite interesting—a corporate cooking event where everyone attended a Thai cooking class. Partners, associates, staff—everybody in the office—basically wore a chef’s apron and got their hands dirty and cooked a Thai dinner together to celebrate.
I should mention that we also just moved into new offices in a prime CBD of Shanghai. The impetus for the move was really to anticipate the continued growth of our office. The name of the neighborhood we are in literally translates to “new Heaven and Earth.” I think that really says it all.
J.P. Morgan Corporate Challenge
Group Thai Dinner