Allen Liu

“2014 LL.M graduate from the University of Manchester with 3-year’s work and internship experience in Law, Financial Accounting and Media Relations.”

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【M&A】Dilemma of Chinese Lawyers in Growing Chinese Foreign Engagements

With the open-market policy deepening, Chinese company foreign engagements in trading and investments are expanding each year, both their size and scope. Companies inevitably become involved in many economic disputes along the way. In recent years, such disputes mainly concentrated in IP, International Trade, Anti-competition and Maritime issues, and most of such are tried in foreign courts and arbitral institutions.

Many Chinese companies engaging in global trading and investments suffered losses in international trials and arbitration due to lacking related trial or arbitration knowledge and differing cultural backgrounds. Many reasons may be attributed to causing the losses. Lack of contract awareness by Chinese companies, lack of operation standardization, and lack of knowledge of foreign laws and proceeding culture are the main reasons. However, these could be mended by improving professional capabilities of Chinese lawyers, should they engage in cross-border proceeding and arbitral process. Chinese lawyer could effectively conduct risk evaluation, evidence collection and preservation in advance; choose proper foreign arbitral institutions or counsel; interpret foreign laws; and control overall cost. Therefore, enhancing Chinese lawyers’ roles and abilities is essential for protecting legal interests of Chinese companies in international trade and overseas investments.

随着对外开放的深化，中国企业对外投资逐年增多，我国企业在国际贸易和境外投资中的范围和规模也在扩大，在此过程中难免会有经济纠纷。近年来，此类纠纷集中在知识产权、国际贸易、反不正当竞争、海事海商等领域，并且纠纷多在外国法院或外国仲裁机构进行审理。

许多中国企业在参与全球贸易和投资中，由于文化背景的差异以及对国际诉讼和仲裁的相关知识缺乏了解，导致在国际官司中吃亏不少。造成上述局面的原因尽管很多，其中中国企业缺乏合同意识、经营行为不规范、不了解国外法律和诉讼文化等是重要原因。但是，这可以通过中国律师的专业能力来弥补，因为中国律师在跨境诉讼和仲裁中，可以有效地进行风险预判、事先证据收集和保全、选择仲裁机构及外国律师、解释外国法律和控制成本。因此，加强中国律师在中国企业国际贸易和境外投资中的作用，对于维护中国企业的权益是非常有必要的。

-By Allen LIU

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【Shanghai】Latest News of Pilot Free Trade Zone

Shanghai Pilot Free Trade Zone (PFTZ) Rules has been in effect since August 1st after three round votes. A lot of breakthroughs appear in the rule. Negative List regulation, five financial innovations and convenient corporate registration may be regarded as the biggest highlights. Before granted market entrance permission, foreign investments or companies would be granted national treatment and negative list regulation. For a long period of time, China enforced positive list regulation on foreign investments. In order to adapt to economic globalization, to meet the development needs of open economic system, to enhance the transparency of market access and to facilitate investment process, Chinese administration had changed foreign investment program approval, company establishment and modification to management by record, in areas beyond negative list. Furthermore, company registration process has already been eased up, and has adopted one-stop service for foreign investment. It bids farewell to many red tapes and bureaucracy vexing foreign companies before. This is both a chance and a challenge for foreign investments seeking opportunities in China.

  上海自贸区条例经过三审表决，已于8月1日施行。其中有不少突破，不过负面清单管理模式、五大金融创新以及企业注册便利化更是亮点。关于负面清单管理，自贸区实行外商投资准入前国民待遇加负面清单管理模式。长期以来，我国对外资的管理一直采用“正面清单”管理模式。为了适应经济全球化以及开放型经济体系发展的需要，增强市场准入的透明度，提高投资便利化水平，对负面清单之外的领域，将外商投资项目核准和外商投资企业设立和变更审批改为备案管理。另外，企业注册也实现了便利化，建立企业准入单一窗口工作机制，企业只需按照规定提供一个表格，通过一个窗口提交申请材料，实现外商投资项目、企业设立和变更等行政事务一站式办理，这也告别了过去行政色彩浓重的层层审批制度，对于外资而言，是机遇也是挑战。

- By Allen LIU

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【M&A】 2014 Chinese M&A Trend in Capital Market

M&A could be seen as the theme of Capital Market in China in 2014. After brokers set up a lot of Buyout Funds the second half of 2013, many public companies setting up Buyout Funds with various private capital investment firms was trending in the first half of 2014. By the end of July, almost 30 public companies listed in Shanghai and Shenzhen Stock Exchange participated in the trend, of which the total assets under management would be worth more than 22 billion RMB. In this process, companies in education, technology and medical industries had become the main funding force behind the funds. Public Companies mainly establish the funds through four methods: firstly, they set up buyout funds with brokers; secondly, they, along with affiliated parties and PEs, join forces to set up such funds; thirdly, they co-work with fund subsidiary entities to form buyout funds together; fourth, they themselves or through their subsidiaries form joint ventures with PE funds. M&A is extremely active in China mainly due to the fact that many public companies suffer ‘bottleneck dilemma’ in their core business. For these companies, if they want to continue to be profitable, they are supposed to switch from ‘internal expansion’ model to ‘external expansion’ model. From industry growth prospective, public companies will be more than willing to engage in M&A activities to ensure constant growth.

并购重组，可以说是2014年资本市场的主题。继2013年下半年券商大量设立并购基金后，今年上半年，上市公司联合各路资本在市场上掀起一波并购基金热潮。截至7月底，沪深两市近30家上市公司参与设立并购基金，总规模超过220亿元人民币，其中，文化教育、科技、医疗成为并购基金的主要推动者。上市公司一般通过四种形式设立并购基金：第一，与券商合作设立并购基金；第二，上市公司与关联方合作再联手PE设立并购基金；第三，与基金子公司合作设立并购基金；第四，直接与PE合作设立并购基金，或者通过旗下子公司与PE合作。今年并购异常活跃，主要是因为目前很多上市公司主营业务发展遇到瓶颈，对于企业来说，若要保持目前的盈利增速，“内延式”增长到一定阶段就必须要走“外延式”的扩张道路，所以，从产业的角度而言，企业希望做并购重组。

- By Allen LIU

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【M&A】State Grid Purchase 35% CDP RETI Shares

Yesterday afternoon, State Grid and CDP signed a 2.1 billion Euro purchase agreement of 35% CDP RETI shares, a subsidiary wholly-owned by CDP. This deal means SG will indirectly hold shares of Italy state transmission company and the state natural gas company. This is a new breakthrough for high-end manufacturing of electrical field after High-speed Rail and Nuclear Power. To withhold the risks of economic slowdown and to promote the transformation and upgrading of Chinese manufacturing industry, this deal is regarded as a National Strategy for high-end manufacturing to expand in the international market. The expansion of SG’s business will promote the development of overseas market for national electrical equipment company.

国家电网昨天下午与意大利存贷款公司签署协议，以21亿欧元价格收购意大利存贷款公司（CDP）旗下能源网公司（CDP RETI）35%股权，间接持有意大利国家级输电公司和国家级天然气公司股权。这是继高铁、核电后，电工领域的高端制造业“走出去”的又一突破。为了抵抗经济下行压力的风险和促进中国制造业转型升级，高端制造走出去已成为重要战略。国网出海速度加快的同时，也将带动国内电工设备公司海外市场的发展。

- By Allen LIU

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【China】The Next 10-year Economic Trend

According to President Xi’s recent survey, it can be viewed as the next 10-year economic trend of China. In general, it can be described as the Three Changes. That is, growth speed will transform from high-speed to middle-high-speed, structure adjustment will transform from structure imbalance to optimising and rebalancing, macro-policy will transform from quantitative easing and extensive stimulation to total stability and optimal structure. What the government supposed to do is to keep the policy concentrated and digest the impacts of previous policy stimulation.

根据习近平近期的调研，可以看出中国未来十年的经济趋势。从总体而言，就是“三大转变”，即：增长速度将从高速向中高速转变，结构调整将从结构失衡到优化再平衡转变，宏观政策也将从总量宽松、粗放刺激向总量稳定、结构优化转变。政府要做的就是保持政策定力，消化前期政策刺激。

- By Allen LIU