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CLPlive PHOTO

Finalists announced for the China Law & Practice Awards

Herbert Smith Freehills, Freshfields Bruckhaus Deringer, and Skadden, Arps, Slate, Meagher & Flom are among the firms nominated for International Law Firm of the Year at the China Law & Practice Awards.

Vying for the showcase category for indigenous Chinese players are firms that include King & Wood Mallesons, Fangda Partners, JunHe, and Han Kun Law Offices.

China Law & Practice is set to host the awards in association with sister publications The Asian Lawyer, The American Lawyer and Legal Week on Sept. 13 at The St. Regis hotel in Beijing.

The awards recognize top matters inside and outside China, and best-performing law firms and standout partners. The September ceremony will also honour initiatives in pro bono work, technology innovation and an in-house team of the year.

Shortlisted deals feature some of the largest and most high-profile transactions in China. Video streaming site iQiyi’s $2.25 billion Nasdaq listing and iPhone manufacturer Foxconn’s A-share listing are among deals competing for equity securities deal of the year. Alibaba’s acquisitions of Sun Art Retail and meal delivery app Ele.me are both nominated for the M&A category.

Fangda, JunHe, Han Kun and Tian Yuan are competing for Capital Markets Firm of the Year as well as M&A Firm of the Year in the domestic categories, while Davis Polk & Wardwell and Skadden are vying in both categories for global firms.

Last year’s big winners included JunHe and Clifford Chance, which took home China and International Firm of the Year, respectively; King & Wood Mallesons was named Most Innovative Firm.

HHP PHOTO

HHP Law Firm brings expertise and knowledge to global markets

As Indonesia’s premier international legal services firm, Hadiputranto, Hadinoto & Partners (HHP Law Firm) advises many of the world’s leading institutions on domestic and cross-border issues. This includes advising on infrastructure projects related to China’s “Belt and Road Initiative”, where HHP Law Firm represents Indonesian and Chinese state-owned companies.

The project attests to the firm’s continuous growth, which seems to parallel Indonesia’s developing economy. “I think infrastructure and renewable energy investments will be a key driver of our country’s economic growth for the next few years. These are also the areas where our firm continues to grow our capability and capacity so that we can better serve our clients’ growing needs,” says Timur Sukirno, managing partner. HHP Law Firm specialises in providing sophisticated advice on corporate and commercial transactions, including mergers and acquisitions (M&A), foreign direct investment and key legal consultancy across industries.

The country’s Investment Coordinating Board recorded that China was Indonesia’s fourth-largest foreign direct investor in the first quarter of this year, with about US$700 million worth of foreign direct investment in Indonesia.

“Our depth of knowledge in the nuances of law and business enables us to guide our clients, primarily multinational companies, state-owned enterprises and major Indonesian companies,” Sukirno says. Strong government relations and its alliance with international firm Baker McKenzie have been HHP Law Firm’s key competencies in helping clients solve complex legal problems across borders and practice areas.

The country’s first wind power purchase agreement for the 70-megawatt Sidrap Wind Farm project, which has become the model for future wind projects in Indonesia, is a pioneering example of the firm’s accomplishments in the energy and infrastructure sectors.

The firm has been voted Indonesia’s “National Law Firm of the Year” by Chambers Asia-Pacific Awards 2018 and “Indonesia Law Firm of the Year 2017” by Asian Legal Business.

“Our longevity and accolades show how our clients believe in our expertise,” says Helmy Handoko, senior business development and marketing communication manager.

Energy PHOTO

Taiwan’s transparency attracts energy finance law firm

Taiwan’s emergence as an energy investment destination could create new openings for Taiwanese companies far beyond the energy sector, as Asia’s thriving economies need energy, international law firm White & Case LLP said in a report yesterday.

The government aims to end nuclear power generation by 2025, by which time 20 percent of electricity should be generated from renewable sources and 50 percent from natural gas.

Offshore wind is a key component of the plan, with ambitions to install 5.5 gigawatts of offshore wind capacity by 2025.

With the growing cost efficiency of renewable energy and the emerging viability of battery storage technology, energy generation is nearing an inflection point, the consultancy said, adding that the shifting market dynamic in the oil-and-gas sector has seen liquid natural gas-to-power emerge as a viable alternative to coal-fired power generation in Asia.

Lower barriers to entry in renewables have given rise to a new breed of developers and investors who compete confidently against the traditional energy utilities and drive innovation in technology, development strategy and capital, it said.

Interest from international investors and financiers in the Taiwanese offshore wind sector has been intense, with market participants enthusiastically jockeying for position, it said.

Factors that help differentiate the local offshore wind sector from other Asian markets include strong government commitment, a transparent pipeline of opportunity, attractive feed-in tariffs and the potential for Taiwan to serve as a foothold for firms looking to build a presence in other emerging offshore wind markets in Asia, the consultancy said.

The investment-grade creditworthiness of Taiwan Power Co (Taipower, 台電) also lends significant support to the industry, it said.

In addition, there is no competition from firms from China, the largest offshore wind market in Asia and the third-largest in the world, White & Case said.

Still, a gap remains between ambition and practical delivery in the region, most noticeably because of slow and opaque approval processes, it said, adding that a lack of coordination among government authorities has also led to disappointments.

A key aspect of international involvement in the Taiwanese offshore wind sector is the pursuit of limited-recourse project finance, it said.

This means that financiers lend solely on the basis of the project and its cash flows, without additional financial guarantees from the project developer, it said.

Bitcoin PHOTO

Market Watch: Bitcoin has fallen to its lowest point since November

On Friday the price of Bitcoin fell to $5,791, the lowest since last November, and while it recovered in Tokyo, the fall has led to a flurry of speculation that it will be wiped out. We cannot know, but since it is the largest of the cryptocurrencies, and other smaller examples are apparently now worthless, the possibility is clearly there. But of course, that may prove wrong – there may be some value after all.

What can we sensibly say?

First some thoughts about money in general; next some about this particular so-called “currency”; and then some about the consequences of a total collapse, or a recovery.

Cryptocurrencies are quite new but the history of money is very old. People have used something as money for at least 20,000 years. Paper money is only a few hundred years old in Europe but was used a couple of thousand years ago by the Chinese. The classic functions of money are threefold: they are a medium of exchange, a unit of account and a store of value. The second is simply something we can price things in, thereby measuring comparative values, and the first and third are obvious.

On this tally, none of the cyber currencies stack up. They have a marginal use as a medium of exchange because some people will accept them in exchange for goods and services, but they are too volatile to be useful as a unit of account or store of value. Indeed in most transactions, they don’t really serve as mediums of exchange because they have to be switched into real money first. They are, however, an asset class like gold, fine wines or classic cars.

That leads to the next question, and maybe soon very relevant question: what happens now to their value?

With regular currencies there is an issuing body that will in extremis stand behind them: usually a national government. Ultimately the backing is the taxing power of the state. Sometimes that taxing power is inadequate to support the currency, or the central bank issues too much of it. The most recent example of this is Venezuela right now. The Bolivar has lost 99 per cent of its value against the dollar this year (Bitcoin has lost 58 per cent), and if I have got my decimal point in the right place the current rate is more than 100,000 Bolivars to the dollar. So it is in effect worthless. The poor country (which given its oil revenues should be the richest in Latin America) is running on barter and dollars. Currency reform is promised for August, and we’ll see.

So what is behind Bitcoin? Well, it is not clear that there is anything there at all. It may be that the holders of Bitcoin will collectively support it, in that they will accept it in return for goods and services. That would allow it to continue. But if they collectively try to bunk out, there would be a Bolivar situation.

Might there be collective support? The trouble is that we don’t know who owns the Bitcoin. A huge amount of energy has gone into uncovering ownership but apart from a few high-profile holders such as the Winklevoss twins in America, the names remain concealed. By looking at IP addresses, it is clear that ownership is very concentrated. According to BitInfoChart, 87 per cent of all coins issues are held by 0.5 per cent of holders. But the big holders don’t seem very active, for many of them don’t seem to have sold any at all.

Anecdotal evidence suggests that the larger holders in the developed world fall into five groups. There are some tech-savvy people who got in very early and saw cryptocurrencies almost as a game. They are probably still holding onto all or most of their stock. Second, there are people around the world who have suddenly come into money – oil workers in Kazakhstan – and want to pop it into a variety of different investments. Third, there are computer students, who literally bought the hype and put cash into a few Bitcoin while there were still affordable. Four, there are general investors, many of whom who got suckered in last autumn and are sitting on big losses. And finally there are the illegal or tax-avoiding holders who want an asset that is under the radar.

The intriguing question is this: who, among these groups, really needs to sell? We have seen a collapse of the currency, but from a very high level. Many holders, probably most, will be still on a profit. So the question will be whether enough of them decide that they do want the deposit for a house or whatever else.

But this is in the West. Most of the trading in Bitcoin is now in Asia, with much of that in China. It may be that this is more trading than holding, or it may be that investors in the developed world have indeed been gradually unloading their stock and this is being picked up by Chinese investors. It may be that as and when the final collapse comes, the run will start in Asia. We simply don’t know.

What we do know is that cybercurrencies are much frowned upon by the financial establishment in the West. There are a few supporters but not many. On Friday Mohamed El-Erian, chief economic advisor at Allianz, said Bitcoin would be a buy if the price falls below $5,000. The most scathing and detailed commentary came last week from the Bank for International Settlements (BIS). It said there were three problems: scalability, stability and trust.

On scalability it pointed out that these currencies were now using enough electric power to run Switzerland. It follows that if they were to grow further there would not be enough power in the world to drive them. Stability, well – we have seen what has happened. And trust? The BIS thinks that the decentralised nature of cryptocurrencies is a weakness rather than a strength.

We will know the answer pretty soon. My instinct is that these cryptocurrencies will disappear in a puff of smoke. I just hope too many people are not too damaged when it happens.

Netherlands PHOTO

Dutch entrepreneurs optimistic about Chinese business climate

This week, BenCham presented the key findings of the Sino Benelux Business Survey at the Embassy of the Kingdom of the Netherlands in Beijing. Every year, BenCham investigate the business climate for Benelux businesses in China. “It is great to see that Benelux businesses are performing very well and are expecting to profit even further from the current business climate. Many are actually outperforming the local market,” said Mr. Bas Pulles, Deputy Head of Mission of the Netherlands Embassy in Beijing.

Favorable Business Climate

Dutch and Benelux businesses are optimistic about doing business in China. A majority experiences the business climate as favourable. 89% of Dutch companies realized equal or increased profits according to the survey. The success of Dutch companies may be due to their competitive position in the market, which according to businesses is thanks to their high product quality and good management. Expectations for the business results in 2018 are overall very positive.

Economic Slowdown

The Chinese economy has entered a new phase after its years of high-speed GDP growth. The aim of the government is to stimulate qualitative rather than quantitative growth by focusing on domestic consumption. So far, the effects of the Chinese economic slowdown on Benelux businesses appear limited. More than half of the businesses do not expect any impact.

“Even though we expected the economic slowdown to severely impact businesses, it seems we are already transforming towards ‘the new normal’ and the impact is limited. We believe this is mainly because many Benelux businesses are active in sectors which are booming because of economic trends such as urbanization, made in China 2025 or the rise of the middle classes,” said Mr. Roland Reiland, Deputy Head of Mission of the Luxembourg Embassy in Beijing.

Rising Salary & Regulatory Costs

Businesses experienced positive results, based on higher turnovers, better use of technology and increased efficiency. However there were also negative drivers. There is an increasing financial burden because of rising salary and regulatory costs, which makes that some businesses are considering leaving China. Also, the unlevelled playing field is making things increasingly difficult for Benelux businesses: many businesses feel local competitors receive preferential treatment. Moreover competition from other foreign owned (and Chinese) companies is growing. Also, more so than last year, businesses perceive the government regulations as restrictive.

“It is an interesting paradox really: many businesses are profiting in the current business climate but at the same time we see an increasing number of businesses contemplating to leave the Chinese market,” said Mr. Karel van Hecke, Deputy Head of Mission and Head of the Economic Department of the Belgium Embassy in Beijing. “A possible explanation may be that businesses who came here many years ago purely for cheap production are now struggling, but more recent entrants to the market are thriving,” mentioned Mr. Raoul Schweicher of Moore Stephens Advisory.

Belt & Road Initiative

For the first time the BenCham questionnaires and the Sino-Dutch survey were merged. When the 2016 edition of the Sino Benelux Business Survey was presented, little was known about the impact of the Belt and Road Initiative. Right now, more details on projects are available. However, only 16% of Dutch respondents has come across opportunities arising from BRI, and a vast majority 81% feels they don’t have enough information about BRI to profit from it.

“Let us not forget that many projects are currently being branded as a BRI-project. This makes it difficult for entrepreneurs to discover what BRI actually entails. For instance, we are already seeing some impact on for instance the logistics sector, with air routes being used much more frequently. This is due to BRI-projects, but not directly linked. It’s important that local authorities start defining BRI projects more clearly so that we can actually gain insight into the opportunities,” said Mr. Van Hecke.

Mr. Pulles added: “Because so many projects are branded as a BRI-project, businesses are very unsure of concrete opportunities. Right now, we notice most opportunities are within really specific projects for very specific parts or subprojects, for instance in the field of technology or ports. As embassies, we need to share more information on BRI and work on translating high-level BRI projects into such concrete opportunities.”

Trade War PHOTO

China slams US “blackmailing” as Trump issues new trade threat

US President Donald Trump threatened to impose a 10 percent tariff on $200 billion of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.

Trump’s latest move, as Washington fights trade battles on several fronts, was unexpectedly swift and sharp.

It was retaliation, he said, for China’s decision to raise tariffs on $50 billion in US goods, which came after Trump announced similar tariffs on Chinese goods on Friday.

“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” Trump said in a statement on Monday.

The comments sent global stock markets skidding and weakened both the dollar and the Chinese yuan on Tuesday. Shanghai stocks plunged to two-year lows.

China’s commerce ministry said Beijing will fight back with “qualitative” and “quantitative” measures if the United States publishes an additional list of tariffs on Chinese goods.

“Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions,” the ministry said in a statement.

“The United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the US, but of the world.”

US business groups said members were bracing for a backlash from the Chinese government that would affect all American firms in China, not just in sectors facing tariffs.

Jacob Parker, vice president of China operations at the US-China Business Council in Beijing, said China would undoubtedly “begin looking at other ways to enforce action against U.S companies that are operating in the market.”

Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for US goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said.

Washington and Beijing appeared increasingly headed toward open trade conflict after several rounds of talks failed to resolve US complaints over Chinese industrial policies, lack of market access in China and a $375 billion US trade deficit.

US Trade Representative Robert Lighthizer said his office was preparing the proposed tariffs and they would undergo a similar legal process as previous ones, which were subject to a public comment period, a public hearing and some revisions. He did not say when the new target list would be unveiled.

“As China hawks, like Lighthizer and (Peter) Navarro, appear to have gained power within the Trump administration lately, an all-out trade war now seems more inevitable,” said Yasunari Ueno, chief market analyst at Mizuho Securities in Japan.

Tit-For-Tat

On Friday, Trump said he was pushing ahead with a 25 percent tariff on $50 billion worth of Chinese products, prompting Beijing to respond in kind.

Some of those tariffs will be applied from July 6, while the White House is expected to announce restrictions on investments by Chinese companies in the United States by June 30.

“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong,” Trump said.

Trump said if China increases its tariffs again in response to the latest US move, “we will meet that action by pursuing additional tariffs on another $200 billion of goods.”

Trump said he has “an excellent relationship” with Chinese President Xi Jinping and they “will continue working together on many issues.”

But, he said, “the United States will no longer be taken advantage of on trade by China and other countries in the world.”

Cooling Chinese Economy

The intensifying trade row threatens to put more pressure on the already cooling Chinese economy, risking an end to a rare spell of synchronized global expansion and collateral damage for its export-reliant Asian neighbours.

China’s central bank unexpectedly injected 200 billion yuan ($31 billion) in medium-term funds into the banking system on Tuesday in a move analysts said reflected concerns about liquidity but also the potential economic drag from a full-blown trade war.

China imported $129.89 billion of US goods last year, while the US purchased $505.47 billion of Chinese products, according to US data.

Derek Scissors, a China scholar at the American Enterprise Institute, a Washington think tank, said that means China will soon run out of imports of US goods on which to impose retaliatory tariffs.

China was unlikely change its industrial policies in response to the US trade threats, he said. That could take a long and painful trade fight.

“As I’ve said from the beginning, China will back off its industrial plans only when US trade measures are large and lasting enough to threaten the influx of foreign exchange. Not due to announcements,” he said. – Reuters