China’s leaders, faced with an economic slowdown, have gone on the offensive.
In the latest development, international law firm Dentons, with 10,000 lawyers worldwide, announced that it is dissolving its Chinese business thanks to restrictive new laws on data privacy, cyber security and capital control.
The global response to these restrictions is growing.
US president Biden this week announced new measures to limit American investments in China, citing national security concerns, placing new barriers to investment by private equity and venture capital firms in high-tech sectors.
Similar tensions are developing between India and China, with the Jack Ma-founded Ant Group divesting more than $600 million from India’s Paytm in response to Indian investigations of Chinese companies.
By contrast, India has taken a series of steps in recent months to attract ever more investment from the West.
In March, long-anticipated changes to India’s legal framework allowed overseas legal firms to open offices in the country, “giving foreign lawyers a foothold in one of the biggest legal markets in the world,” as the Financial Times reported.
Legal giants including DLA Piper, Herbert Smith Freehills and Baker McKenzie are all considering opening offices in India, having so far operated out of Singapore and Hong Kong when dealing with Indian-related business. Baker McKenzie says that it already has 300 lawyers in more than 40 countries working on mandates connected with India, helping companies raise investment or advising those wanting to buy businesses in India.
Once they decide to commit to India, the major firms are likely to open offices in the country’s financial centre Mumbai, its technology centre Bengaluru and its political heartland of Delhi. Managing partner at one of India’s biggest law firms, Cyril Shroff at Cyril Amarchand Mangalas, is in favour of more international legal firms coming in.
“The status quo has to change,” he says. “I think there will be an initial wave of those who have been waiting for a long time who will open at the first opportunity. I think the others will kind of wait and watch to see how it’s going.” It would be overall a positive development, he believes: “It will align with the India story of more global investment coming to take India to the next level, so there’ll be more quality work. I think fee levels will go up because, at the moment, there is a race to the bottom. I think this will change that dynamic, and there will be a greater focus on more modernisation of law firms.”
Once international law firms gain a foothold in India, we can expect a further wave of investment into the country, as an ever wider circle of investors – including pension funds, private equity and venture capital – gain reassurance that their money is in safe hands, or at least that they have a strong chance of legal redress in case of difficulties.
The economic momentum shift from China to India continues apace.
Dinesh Dhamija founded, built and sold online travel agency ebookers, before serving as a Member of the European Parliament. His latest book, The Indian Century, will be published later this year.