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Deal signals massive opportunities

|Written By Robert Todd

A Canadian law firm has signed an unprecedented deal with a Chinese trade promotion institution, which one business expert says should signal to others in the legal industry the massive opportunities available in the communist country that holds about a fifth of the world’s population.

‘It’s a major agreement for our firm, a lot of potential as well to grow our business and of course to increase our co-operation with China,’ says Martin Cauchon.

“It’s a major agreement for our firm, a lot of potential as well to grow our business and of course to increase our co-operation with China,” Gowling Lafleur Henderson LLP partner Martin Cauchon tells Law Times in a telephone interview from China, where the deal was signed last week at a ceremony in Beijing during a joint mission by the Canada China Business Council and five Canadian premiers.

The arrangement will see the China Council for the Promotion of International Trade’s legal affairs department refer clients to Gowlings and school the firm’s professionals on the Chinese market. In return, Gowlings will provide legal assistance to Chinese companies in Canada, and offer business seminars on this country’s market.

The agreement further expands the major Canadian firm’s international reach. Gowlings has offices in Moscow and London, and Cauchon says a representative office in China would be the logical next step for the firm, but adds by no means has that been decided. The firm currently has relationships with major Chinese firms, which complete part of the work on deals involving Chinese clients.

“Of course we would like to increase our presence here in China to provide better services,” says Cauchon, national leader of the firm’s China group and a former federal attorney general. “If you’re interested in doing business with [China], they like it when you decide to get established in their local market.”

The timing of the deal is also beneficial, notes Cauchon, with the Chinese market expected to grow by as much as nine per cent next year as other global markets forecast contraction amidst the global economic downturn.

“There’s a lot happening here in China,” he says, adding the timing is more of a coincidence than a reaction to the current economic situation. CCPIT bills itself on its web site as “the most important and the largest institution for the promotion of foreign trade in China.”

The Beijing-based institution was established in 1952, according to the web site, and Cauchon says it has signed similar deals with U.S. law firms.

Gowlings noted it was the firm that filed the first Canadian patent application in China when the country’s patent office opened in 1985.

Schulich School of Business Prof. Justin Tan, who was the first U.S. Fulbright Scholar in China business economics, says Canadian law firms need to push further into the Chinese market.

“I’m strongly convinced that Canadian firms should be more involved in Chinese trade, and have a lot more to gain, especially in areas where Canada has a special advantage,” says Tan, adding high value-added services like legal work is a definite area of opportunity.

Canada’s relatively stronger ties to China compared to other major economic powers gives the country’s business sector a rare opportunity to enter the Chinese market, says Tan.

Prof. Betty Ho, who teaches a “financial markets in China” course at the University of Toronto Faculty of Law, says Canadian lawyers have skills desired by Chinese companies.

“I think Canada in fact has an advantage that she has not fully used. Canada is unique in that the average Canadian lawyer would know English law and American law, in addition to Canadian law,” she says. “But you ask an average English lawyer and he might not know anything about American law. You ask an American lawyer, and he’ll know nothing about English law.”

She adds that Gowlings’ deal with CCPIT will provide the kind of exposure it needs to get work from Chinese companies. “For major deals, the Chinese businesses in fact are quite sophisticated in the selection of lawyers,” says Ho. “There’s the usual beauty contest, but this would help at least get an entry ticket to the competition.”

One firm that has been exploiting Canada’s advantage in China for 10 years now is Blake Cassels & Graydon LLP, which has offices in Beijing and Shanghai and is the only Canadian law firm with a permanent office in the country.

Rob Granatstein, Blakes national managing partner and China practice group member, says lots of major Canadian firms are highly involved in the Chinese market. But he says Blakes thinks it’s vital to have a physical presence there.

“We happen to believe that there is no substitute to having a working office on the ground, and we happen to believe that 10 years of doing work for Canadian businesses in China and Chinese businesses investing in Canada, with a dedicated team both in China and in Canada, is a real winner in terms of a strategy. But that doesn’t mean it’s the only strategy.”

Granatstein says that with an increasing amount of the firm’s work coming from global markets, “China is one piece of a strategy that has us paying close attention to possibilities for generating revenue outside of Canada’s borders.”

Cauchon says Canadian lawyers need to be willing to spend time in airports if they want to break into the Chinese market. “You have to make yourself known to people in China, you have to make a demonstration that you’re interested in the work, and after that it’s about relationships. So you have to come back here often to develop your network,” he says.

It’s clear from comments made by a CCPIT official in Gowlings’ announcement of the deal that firms looking to grow have an eager partner. “With more and more Chinese companies going abroad to expand their business, the demands for the foreign-related legal services are increasing sharply,” said Zhang Shun, director of CCPIT’s legal counsel office.

“The expertise of Gowlings professionals is adapted to our reality and provides the flexibility required to support Chinese companies as they grow. We are pleased with this agreement and hope

it will bear fruit for both the Chinese and Canadian business communities.”

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