The Chinese government has issued the first set of licences to foreign law firms that have applied for second offices on mainland China
Five licences were issued, all of which went to Hong Kong law firms, including Deacons. China agreed to relax the 'one-firm, one-office' rule as part of its World Trade Organisation commitments. The rule meant that some firms were forced to choose between Shanghai, China's commercial centre, and Beijing, the seat of government. Most major firms in China - including Linklaters, Baker & McKenzie, Allen & Overy, Freshfields Bruckhaus Deringer and Herbert Smith- want a second licence. Many firms have got around the restriction with best friends alliances or a European merger that gave them a second office. However, some have not been able to take advantage of this loophole, particularly US firms. The Chinese Ministry of Justice (MOJ) has been keen to draw a distinction between Hong Kong and foreign law firms and give the former favourable treatment. The MOJ has at times struggled to define Hong Kong law firms because so many foreign law firms have Hong Kong-registered partnerships for tax reasons. However, it is believed that the licences issued went to firms whose primary practice is in Hong Kong. Deacons has two separate partnerships - one in Hong Kong and one in Australia. The firm already has two offices in mainland China - one in Shanghai and the other in Guangzhou - the Shanghai office licence was granted to its Australian-registered partnership. Managing Partner Keith Cole said: "Beijing is the political centre and it is important for us to be there because most industries have a presence in the capital." The Beijing office's chief representative will be Franki Cheung, head of the firm's China practice, but he will not move to Beijing. Cole said the intention was to have three partners in the Beijing office, but the firm has not decided who to send.