The government's plan to transform Guangzhou into a regional innovation and financial centre,  combined with the strengthening cooperation between Guangzhou and Hong Kong, have meant that
local firms are snapping up opportunities brought in by the city's new stage of development

Winds of changes bring Guangzhou firms into play

Just three days prior to the opening ceremony of the Beijing Olympics, Guangzhou hosted a conference, which would be of more significance to its business community and legal industry than the world's most important sports gala.

On 5 August, a Hong Kong delegation led by Donald Tsang, the chief executive of the Hong Kong SAR, met with a delegation under the leadership of Guangdong governor Huang Huahua at the 11th Hong Kong-Guangdong Joint Cooperation Conference, where a series of cooperation agreements were signed to benefit both sides.

These agreements are set to advance the cooperation in six areas, including service industry, infrastructure construction, finance sector and Hong Kong invested processing trade companies. Under the agreements, some cooperation, particularly in the service sector, permitted by the Supplement V to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), will be first implemented in Guangdong.  Due to their proximity to each other, Guangdong and Hong Kong have been closely related to each other for more than 30 years, but the CEPA has added greater depth and breadth to the cooperation between them.

The legal professions in Hong Kong and Guangzhou are riding this new wave, strengthening the ties that bind them together and benefiting from each other's success. Delegates from the Hong Kong Bar and the Guangzhou Bar regularly come together to participate in various exchange and training programs, seminars and workshops, all in the aim of better understanding each other's legal system and practices.

14 Hong Kong firms have set up representative offices in Guangzhou; some are operating in association with Guangzhou firms as enabled by the CEPA since 2006. The association between Guangzhou based Whobound and Hong Kong firm K.C. Ho & Fong is an example.

Many local firms, yet to form a formal alliance with Hong Kong counterparts, have already had established working relationship and referral partnership with professional service providers in Hong Kong. "Guangzhou firms started working with Hong Kong firms many years ago, but the trend in recent years is that this cooperation is increasingly expanded and the scale and level of cooperation are continuously uplifted," says Chen Zuoke, partner with leading local firm Guangda. "And the cooperation is increasingly driven by common interests."

Chen continues to explain what the "common interests" are: local firms value the international experience and perspectives of Hong Kong firms, as working with Hong Kong peers can help them bring their practices into line with international standards; On the other hand, Hong Kong firms can leverage local firms' on-the-ground resources and local expertise to penetrate the mainland market and better services their clients.

Before Guangda became a member of the Sino-Global Legal Alliance (SGLA) last September, the firm had worked with a number of Hong Kong firms.  Although Guangda now continues to refer work to them on a case-by-case basis, it prefers working with SGLA member Lovells's Hong Kong office if it has a mandate to advise on large cross-border transaction or a complex commercial dispute in Hong Kong. 

Traditionally, Guangzhou firms have been mostly servicing small and midsized companies, while the high-end market segment is predominantly the domain of national firms. Partners of local firms have never been so sure that the largest advantage of Guangzhou legal service industry is being close and most accessible to Hong Kong, a global financial hub with a well established international business service industry. Now the time has come for local firms to make use of their advantage and close the gap between them and their Beijing and Shanghai rivals.

 "Cooperation between Guangzhou and Hong Kong firms is increasingly important both as a strategy in support of local legal industry development and as a means of ensuring the effective and quality services for companies doing business across the border," says senior partner of Guangdong C & I law firm Catherine Miao.

Miao is a dual qualified lawyer in Hong Kong and the Mainland. She works as a part-time solicitor at Hong Kong firm Li & Partners, one way of keeping her firm connected to the Hong Kong market.
However, it is a paradox that between the two major commercial centres in the PRD region there are not many formal strategic alliance. Miao notes that it is not easy to find a "perfect match".

"Hong Kong legal service market is dominated by leading international law firms, and Guangzhou firms are usually overlooked by them when they are selecting PRC firms to refer work to," says Miao. "Since the 1997 Asian financial crisis, Hong Kong local firms haven't grown that well. There are only a small number of large local players, which makes it difficult for Guangzhou firms to find a high-calibre Hong Kong alliance partner."

Thus, there is a possibility that C & I will open an office in Hong Kong in the next a few years, and then it may hire enough Hong Kong-qualified lawyers to make it eligible to be registered as a Hong Kong local firm.

Nevertheless, there is no lack of enthusiasm from both sides about building stronger and deeper cooperation to achieve a win-win result. The new wave of opportunities emerging under the new phase of CEPA and the Hong Kong-Guangdong Joint Cooperation Conference will motivate both sides to join forces in better ways.

Next: From "made in Guangzhou" to "created in Guangzhou"

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