Is the China goldrush really what it seems? It’s taken as a given that any global firm worth its salt has to be there, but talk to any UK managing partner and they’ll tell you that making profit in China is damn hard going.
Yes, there’s real money still being made in Hong Kong, particularly on IPOs and to a lesser extent dim sum bonds. On the back of this overheating market several US firms have taken a punt. Davis Polk - in a move that presaged its English law move in London - took on partners from Freshfields and Linklaters, while Kirkland took eight partners from A&O, Latham and Skadden, plus 25 associates to support them.
US firms’ moves are eyed quizzically by UK managing partners, who are sceptical that IPO work can continue in the same vein; most question whether the eyewatering remuneration packages can be justified by the pipeline of work.
In the meantime firms such as Jun He and Zhong Lun have been starting to move into Hong Kong via local mergers and have picked up tasty mandates in the process. Both are establishment players in China and as such are pretty well-known by Westerners. But the new breed of Asia firm is equally epitomised by Dacheng. It’s a name that is hardly on the lips of your average UK lawyer, but one that is nevertheless helping to reshape the commercial legal market in China. Because of this we’re running a fascinating feature on a firm that is made up of a collection of different practices of wildly varying quality and client profiles, but which has offices in cities most of us have never heard of, albeit ones that have more inhabitants than most Western capitals.
The next thing Dacheng needs is a decent Hong Kong base. Judging by its growth in the past 10 years - it’s now the biggest firm in China - it won’t take long.
It’s a truism that Chinese businesses learn fast. Up till now Dacheng and its peers have focused on pure growth. Now they’re looking to ape the Anglo-Saxons emphasis on organisational excellence. Western firms looking to build in China are going to have a lot of local competition.