As China’s investment into the US expands, the opportunity for US lawyers grows

Japan Today reports today that China has now become the third largest source of foreign direct investment in the world.  And the biggest national recipient of that foreign direct investment is the United States.  China’s foreign direct investment grew 8.5% in 2011 and the Chinese government is encouraging Chinese companies to go international.  Indeed, the Chinese “government aims to increase overseas direct investment at an average annual rate of 17% through 2015 to $150 billion” according to the Japan Today report.  Importantly, “the top destination for overseas Chinese investment last year was Hong Kong, while the US rose to second place with $4.05 billion invested, surging 123.5 percent from 2011.”

????????????????????????????????????????????????????????????????????????????????????????????

A looming sea-change for US lawyers

Why are these figures so important to US lawyers?  Because for many decades – as I’ve outlined before – most sources of foreign investment into the US have been European.  And with China’s rapid rise in overall US-focused foreign direct investment – US lawyers ought to be ramping up their business development focus on China to near the levels they’ve focused previously on Europe – in order to capture what is sure to be growing and lucrative cross-border work emanating from China.

Recent Chinese overseas deals

Japan Today reports that:

  • “In May 2012, China Three Gorges, operator of the world’s biggest hydro-electric dam, closed a deal to buy a 21.35 percent stake in power generator Energias de Portugal for 2.7 billion euros ($3.56 billion).
  • In November, sovereign wealth fund China Investment Corp (CIC) acquired a 10 percent stake in Britain’s Heathrow Airport for 450 million pounds ($704 million).
  • CIC was set up in 2007 with $200 billion to make better use of China’s colossal foreign exchange reserves that now amount to nearly $3.5 trillion, and its total assets stood at $575.2 billion at the end of 2012.”

What’s next?

“The [Chinese] government aims to increase overseas direct investment at an average annual rate of 17% through 2015 to $150 billion.”  “By end of 2012, Chinese companies employed 1.49 million staff overseas, about half foreign citizens, the report added.”  These figures mean real deal work for those US lawyers that make the effort to capture it.

John Grimley helps law firms, law firm practice groups, individual lawyers, financial services and governmental relations professionals develop and implement custom business development initiatives. To enquire about his services, contact him at +1.213.814.2855 or at jg@jgrimley.com.

Upcoming US-China Legal Summit highlights immense opportunity for US law firms

The U.S. – China Legal Summit — scheduled for March 4, 2013 in Hong Kong — comes at a time when the United States has just recently become the main recipient of Chinese foreign direct investment.  At the same time, Chinese companies are facing formidable US litigation and political hurdles associated with US market entry.

As the even organizers outline: “China and the United States are parties to the most important bilateral relationship in the world today, that between the largest advanced economy on earth and the largest and fastest-growing developing one.”

????????????????????????????????????????

China investment in the US

While much attention has rightfully been paid over the last decade to the opportunity the Chinese market presents for US companies, it is also vitally important to remember the importance of Chinese foreign direct investment into the United States.

During the the first half of 2012, foreign investment by China climbed more strongly than in 2011, and the U.S. led all countries in receiving new Chinese investment during that period. While there have been some broken deals as well as political opposition to some investments, China’s outbound investment trajectory looks likely to continue to expand into in the future.

What can US law firms do to build a Chinese client base?

Yun Kriegler reported in The Lawyer in May that:  ”As the world looks east, Chinese law firms are increasingly looking west. The convergence between Western firms and their Chinese counterparts has begun – but what models can international firms employ to best exploit the opportunities from the region?”

As I outlined in detail last July, US law firms with an interest in building a Chinese client base should now effectively employ the following initiatives:

  • Develop effective referral relationships with independent Chinese law firms
  • Identify and communicate opportunities in the US market of interest to Chinese companies
  • Open a representative office in China
  • Establish a China-focused social media initiative

Chinese companies need American lawyers

As the event organizers have pointed out: “Larger Chinese companies are now finding themselves beset by U.S. regulatory investigations or litigation.”

Given China’s record breaking foreign direct investment focused on the United States, and difficult problems Chinese companies are now facing when seeking to do business in America – the opportunity for US law firms is self evident.  The question is – who will take the steps necessary to secure work associated with record Chinese investment into the United States?

John Grimley helps law firms, law firm practice groups, individual lawyers, financial services and governmental relations professionals develop and implement custom business development initiatives. To enquire about his services, contact him at +1.213.814.2855 or at jg@jgrimley.com.