A Shanghai slingshot for overseas expansion

Easier compliance

Shanghai companies have been boldly expanding into new markets.

Apart from mature markets such as Europe and the United States, more of them are reaching into Association of Southeast Asian Nations member states, the Middle East, and Latin America, according to He Dongbin, deputy director of the Shanghai Commission of Commerce.

In the first half of this year, Shanghai registered 383 newly established or acquired outbound projects, marking a 105 percent year-on-year increase in investment value.

Diversification of investment destinations has been a major trend. Economies involved in the Belt and Road Initiative have emerged as new investment targets, he said.

This is in line with a broader trend. About 80 percent of surveyed Chinese companies plan to expand overseas in the next three years, with ASEAN continuing to serve as the first choice, according to a report released by Singapore-headquartered bank UOB in early August.

The good news is that companies are being more proactive regarding compliance management when they enter new markets, according to He.

However, Liu Yanhao, deputy director of the Shanghai Municipal Bureau of Justice, said the expansion of legal service providers has not caught up with the expansion of Chinese companies and industries in overseas markets.

Companies can look for professional service providers in foreign markets on their own, Liu said. But the process will be lengthy and painstaking, and the strenuous efforts may not provide a satisfactory result.

A government-backed platform that can link lawyers with experience of overseas markets is an ideal solution, said Chen Jun, a City Development Law Firm partner, who also serves as deputy director of the foreign affairs committee of the Shanghai Bar Association.

In early August, Shanghai launched the international legal services hub, a digital platform where companies can search for institutions that provide legal services in overseas markets as well as experts who specialize in a certain country or industry. So far, 921 institutions with 413 overseas operations have been included on the platform.

Apart from connecting companies to law firms with expertise a company needs, the platform can identify potential country and industry risks.

This is especially important given the current complicated and unpredictable international situation, Chen said. Political changes can lead to policy inconsistencies or even deliberate legislative action targeting Chinese companies, he added.

"However, there is always a window of opportunity before such measures take full effect," Chen said.

"Professional service providers can usually notice signs in advance. The government can provide early warnings and intelligence on the platform. The law firms on the platform serve as 'converters', interpreting the needs of Chinese enterprises and connecting them with local professional institutions. The problems can be solved more efficiently or even avoided," he added.