Fronting China’s largest law firm is no small task. Linda Yang, a partner of Beijing-based Yingke International, knows that guiding investors in today’s economic climate means balancing the need for expansion and diversification with risk assessment and a respect for a multitude of different legal structures.

Since being founded in 2001, Yingke, which employs more than 4000 lawyers internationally, has provided more than 18,000 public and private sector clients with services in law, finance, investment banking, social networking and e-commerce. And amid China’s economic slowdown and market evolution, China's investor strategies have shifted dramatically.


Global reach

Faced with slowing economic growth at home, Chinese investors are increasingly pursuing geographically diversified investments to safeguard their holdings, and some of Yingke’s Chinese clients are placing up to 40% of their investments abroad. “When we started to build up our global network a few years ago, we saw predominantly state-owned companies investing abroad to purchase valuable assets and equity of foreign companies,” says Ms Yang. “But now you see many medium-sized private Chinese companies eyeing opportunities abroad.”

For years Yingke has focused on crossborder transactions, both inbound and outbound, representing international as well as local clients. In 2010, the firm began to expand globally, opening offices in Budapest, Verona, Istanbul, Warsaw, New York, São Paulo and Mexico City within two years through joint ventures with local law firms. Yingke now has 30 overseas offices and plans to establish several more.

“In 2013 we were ranked as the most globalised Chinese law firm because of our global network,” says Ms Yang. “So many Chinese companies come to us, some of them asking us to provide legal services, some asking us to find good projects for investment.”

Change in direction

Countries suffering from decreased investment and trade due to China’s slowdown has become a familiar story of late, and commodity-exporting markets across South America, Africa and beyond are bearing the brunt of the decline. But while Chinese investor activity in the developing world has slipped, it is building in more mature markets with advanced industries.

“Both destination countries and industries for outbound investment are more diversified,” says Ms Yang. “We can see the interest in developed countries increasing, particularly in Europe and the West, mainly because these economies are more mature. In terms of laws and regulations, they are stable and transparent.”

Nonetheless, crossborder investment has its share of pitfalls. “It has been a bitter process for Chinese investors to mature, involving some very hard lessons,” says Ms Yang. “The most important obstacles are the laws and regulations, of which Chinese investors often don’t have a solid understanding. You assume you can make successful replications of your company in another country, and many investors fail for this reason.”

Cultural differences are also very important, she stresses, adding: “We frequently see failures in understanding between Chinese investors and their Western counterparts.”

In partnership

Due diligence and strategic partnerships can be key damage control measures, according to Ms Yang. “Chinese investors have money but they lack experience with certain industries, so they establish funds with industry-specific companies to do the core investment,” she says. Last year, one of her clients completed a $1.8bn acquisition of a US semiconductor company. “It’s not easy to be approved by the US's regulatory system in this sort of industry, but they did it,” says Ms Yang.

Yingke continues to grow in size and reach, and has moved its global headquarters into China World Tower III, Beijing’s tallest building. Zurich and Paris offices opened in April, followed by Kazakhstan and Kyrgyzstan in May, in line with China’s rapidly expanding New Silk Road initiative; Yingke is already advising both state-owned and private companies on a number of Silk Road infrastructure projects. Future expansion plans for the firm include offices in Thailand, Japan, France, Indonesia, Mauritius, Australia, New Zealand, Canada, and Malaysia, showing that in spite of the slowing domestic economy, Chinese companies' thirst for international investment is still in good health.