CHINA: An Introduction to Corporate/Commercial: Shanghai (PRC Firms)
Chambers GCR 2024 – Practice Area Overview: China: Corporate/Commercial: Shanghai (PRC Firms)
It is expected that since the year of 2024, the PRC legal service industry with the city of Shanghai taking the lead, will face a “Supply-side Structural Reform”.
自2024年开始，以上海为代表的中国法律服务市场将正式面对“供给侧结构性改革”。
“Supply-side Structural Reform” is a macro-economic notion and policy put forward by the PRC government several years ago, and we believe it will become the fundamental logic behind the reformation of the legal service market in the coming year. To understand this term in plain language, it refers to the reduction of ineffective supply and the expansion of effective supply by means of “Reform”, realising “Structural Adjustments” of the supply-and-demand relationship.
这个词汇将成为年度的法律市场深度变革的根本逻辑。“供给侧结构性改革”是数年前中国政府提出的宏观经济政策，如果用一个通俗易懂的语言去解释这个术语，就是以“改革”的方式减少无效供给，扩大有效供给，实现供给关系的“结构性调整”。
The conclusion above stems from our findings based on the intensification of consumption stratification in the retail sector, which also leads to the growing disparity of legal needs.
得出上述结论源自于我们发现，消费分级加剧导致法律需求也出现两极分化的趋势。
Since entering into a post-pandemic era, the living space of start-ups and small and micro enterprises has been severely squeezed. The lack of liquidity and depression of the financing market have led to an overall downward trend in the demand for legal services on PE/VC and IPO projects. On the other hand, the trends and development of various industry hot spots, such as humanoid robots, AI, agricultural science, advanced healthcare, etc. are still going strong. Additionally, opportunities of legal services on dispute resolution are also worth noting, as funds/venture capitals of all kinds are attempting to exit in clusters by way of “redemption” or “liquidation” due to blocked exit paths.
自进入后疫情时代以来，初创企业以及小微企业的生存空间被严重挤压，缺乏流动性及融资市场的萧条导致传统的PE/VC以及IPO法律需求总体呈现下降趋势，但是行业热点，比如人形机器人、人工智能、农业科技、高端医疗等赛道依然热度不减。此外，各类基金由于退出路径受阻而通过“回购”或“清算”等方式集中退出所导致的争议解决机会值得关注。
In contrast, it is expected that large-scale multinational enterprises, state-owned enterprises and industry leaders will continue to demonstrate strong performance and high demand for legal services. This is largely not only due to their stable payment capacity, but also more importantly, their strengths and awareness to plan ahead in all aspects during the market’s recession, through strategies including acquiring competitors in the industry, carrying out strategic investment in companies that are in its upstream and downstream industries, or delving into the layout and expansion of offshore businesses. Likewise, such clients also have a higher probability to offer the legal market with more chances of high-quality and valued services for resolving potential disputes.
相比之下，大型的跨国企业、国有企业以及行业头部企业的表现以及对于法律服务的需求将继续强劲，不仅具有稳定的付费能力，更重要的是这些客户在“下行周期”中具有逆向布局的实力，包括对行业内的竞对开展兼并收购，对产业上下游开展战略投资，或者开展海外业务的布局与探索。同样的，这类客户也更有机会产生高质量、高金额的争议解决需求。
Under such circumstances, legal needs demonstrate a polarised trend: on the one hand, top-tier law firms will continue to promote the notion of “core clients strategy”, focusing on clients with payment capacity and layout needs. However because the limited quantity of such clients, the competition amongst the high-end legal service market will become increasingly intensified, along with an increase in conflict of interest; on the other hand, as the remaining tiers of law firms are struggling to enter the high-end legal service market, and their clients’ industries are undergoing revolutions, what they could do is to “subsidise” and discover more service opportunities in regional markets and segments, to strengthen its competitiveness by extending the incubation cycle and deeply cultivating in particular markets and segments to offer tailored services.
在此情况下，法律需求呈现出两极分化的趋势：一方面，第一梯队律所将进一步提倡“核心客户战略”聚焦这些具有付费能力和布局需求的优质客户，但是因为这些客户的数量有限，高端法律服务市场的竞争将日渐加剧，利益冲突的情况也会随之提升；另一方面，其他梯队的律所在难以切入高端服务市场的情况下，将伴随客户行业变迁将服务进一步“下沉”到自身更具有竞争力的成长周期、区域市场以及细分领域内挖掘服务机会，通过延长孵化周期，深耕细分市场以及本土化市场而强化自身的竞争力。
We believe structural opportunities that are noteworthy in 2024 also include legal services for compliance needs. Compliance businesses (especially criminal compliance, HR regulatory compliance, tax compliance, state-owned enterprises' compliance system and internal protocol construction, ESG-related businesses, etc.) have performed well during the economic downturn. This is mostly because under the current market trend, some enterprises may attempt to engage or explore in relatively medium to high-risk business sectors due to their internal motivation for profitability, resulting in possible confrontation or even violation under supervision and regulatory policies, to which regulatory bodies are also simultaneously implementing more stringent punitive measure during this year of time, leading to increased demands for respective legal services. In the meantime, constructing compliance system is also an essential tool for many enterprises to “reduce costs and increase efficiency”. Although it is called compliance, it is essentially the company's connotation in personnel, financial, tax and risk management, which determines the company's competitive “soft power”. At the same time, compliance services represented by ESG is also an essential tool for many enterprises to implement “policy orientation” and is widely recognised by the market.
我们认为2024年值得关注结构性机会还包括合规业务，在经济下行周期中合规业务（尤其是刑事合规、人事合规、税务合规、国有企业合规体系建设、ESG相关业务等）均有不错的表现。一方面是因为在此周期之下部分企业出于自身盈利的内驱力可能会从事相对中高风险的业务板块或开展此方面的探索，导致其与监管机构以及监管政策发生摩擦，而监管在此周期下也会开展更为严厉的惩戒措施，形成法律服务的结构性机会。另一方面，合规体系建设是诸多企业“降本增效”的必备工具，虽然名为合规但本质上是公司在人事管理、财税管理、风险管理�����应有内涵，决定了公司的竞争软实力。同时，以ESG为代表的合规业务也是诸多企业贯彻“政策导向”的必备工具，受到市场的认可。
Last but not least, it is particularly worth mentioning that 2024 is an important historical milestone as PRC laws and regulations undergo major revisions in this year. For example, the “Company Law” and the “Civil Procedure Law” have undergone substantial revisions and are both officially entering into force in 2024, among which the revision made to “Company Law” is also one of the largest changes made in the history, including overturning adjustments, such as the classification of shares, board of supervisors, the capital authorisation system, and the system of legal representative. Additionally, as the most important procedural law in the field of dispute resolution, the revised “Civil Procedure Law” has also innovatively designed and supplemented rulings on the procedures of trial, enforcement and trial supervision, especially the systems of online litigation, electronic service and small claims litigation, which will have a long-term impact on future legal services for dispute resolution.
与此同时，特别值得提及的是，2024年是中国法律法规集中更迭的重要历史节点。举例而言，《公司法》以及《民事诉讼法》都在今年经过重大的修改并正式生效，其中《公司法》的修改也是历次修改中变化最大的一次之一，对于类别股份制度、监事会制度、资本授权制度、法定代表人制度均进行了颠覆性调整，值得重点关注。而《民事诉讼法》作为争议解决领域最重要的程序性法律，也对于审判、执行和审判监督等程序，尤其是网络在线诉讼、电子送达、小额诉讼等制度进行了创新化的设计及补充，将对争议解决业务产生长远影响。