Lehman, Lee & Xu Takes the Lead In Helping Chinese Companies Invest Abroad

Aug. 19, 2009 - PRLog -- BEIJING – The world financial crisis has hit China’s export economy especially hard with exports down 26% from a year ago.  However, China’s economy as a whole has weathered the storm remarkably well.  The current trend is now for foreign companies to target China’s domestic consumer market and for Chinese companies to invest abroad.

“Red Circle” firm, Lehman, Lee & Xu has long been a leader in assisting Chinese companies to invest abroad.  During a recent interview, Edward Lehman, Managing Director of Lehman, Lee & Xu commented that “our firm was one of the first private law firms established in China and over the past twenty years, we have built an entire practice group around assisting Chinese companies.  I would say that we represent more large Chinese companies than probably any other firm.  In the early days, we primarily helped State Owned companies form joint ventures with foreign investors and with routine legal work.  Over the past ten years or so, we have been helping to privatize these companies and helping them with much more sophisticated legal work.  The really exciting trend is that now more and more of our Chinese clients are investing abroad and now taking their brands and products to the world.  Our Chinese clients have certainly come a long way from the early days.”  

Almost daily, the Shanghai Daily and People’s Daily report that Chinese firms are investing in such diverse projects as oil and gas projects in the middle east, the building of dams in Africa, the purchase of auto companies in the US and the purchase of mining operations in Australia.  “We have certainly seen this as well” commented Edward Lehman.  “We are currently assisting one of China’s largest fashion and apparel companies with existing operations throughout Europe to enter the US market.  This includes locating a suitable factory site as well as retail outlets throughout Los Angeles, New York, and Chicago.  The client also has a whole host of legal issues to consider including state tax rates, federal tax issues, registering of the clients trademarks and patents in the US, labor and employment issues, etc.  It’s a quite large and exciting project.”

China has strict foreign exchange controls in place which limit the flow of currency and investment out of China.  For that reason, Foreign Direct Investment projects tend to involve large companies that can obtain high levels of governmental approval for large overseas projects.  Edward Lehman commented, “the project we are currently working requires that we establish business operations in three separate states which are geographically very far apart.  Not only do we have to consider issues of federal law, such as US taxation, US customs, trademark registrations, etc., we also need to deal with the state laws of three separate states.  Fortunately, we are in one of the worlds premier legal networks in which we partner with law firms all over the world, including the US.  We have now enlisted the help of three of our partner firms to assist with this project.  In fact, when doing these large projects, having good partner firms is absolutely critical.  We were at one point in the network ALFA International but found that the network was completely inadequate in meeting the needs of our Chinese clients.  After a couple of bad experiences, we chose a much more reliable network with more responsive and reliable member firms.  It can sometimes be difficult taking a Chinese company abroad and you really need partner firms you can trust.”  

When Chinese companies invest abroad, they will inevitably encounter legal systems and business environments which they are very unfamiliar.  In the past, most Chinese companies had little use for attorneys and generally did not employ General Counsel.  Over the past fifteen years, the Chinese legal system has evolved and become much more sophisticated with Chinese companies increasingly relying on attorneys to interpret laws and regulations and the Chinese courts to settle disputes.  

Edward Lehman commented that “one of the biggest problems our Chinese clients face is the different legal systems they encounter outside of China.  Most Chinese companies are now very familiar with the Chinese legal system and now regularly employee attorneys as General Counsel who act as a member of senior management and a key decision maker within the company.  However, in the past, most of our clients acted as manufacturers for foreign exporters.  These business transactions in the past were always subject to Chinese laws and regulations.  What we see now is that our Chinese clients are investing abroad and now directly subject to the laws of the jurisdictions in which they are investing.  China has a very unique legal system and the legal and tax concepts in China do not always mirror similar laws in foreign jurisdictions.  Our firm has a large staff of foreign attorneys and we are routinely called on to assist our Chinese clients in understanding issues concerning foreign tax laws, transfer pricing issues, foreign import quotas and customs, foreign securities regulation, corporate registration and governance abroad, etc.”  

Summarizing his long experience in assisting Chinese clients, Edward Lehman stated “while taking a Chinese company abroad can be challenging work, its frequently the most enjoyable work we do.”        

Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm is recognized as a leading expert in corporate law and an active member of the Chinese legal community.

To learn more about us, please visit our website at www.lehmanlaw.com.

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Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm is managed by Mr. Edward Lehman.