Chambers Careers: In your opinion, what makes the Asia-Pacific legal market interesting?

James Watts: For me, one of the most interesting aspects is that the market changes and develops rapidly. As everyone will be aware, the economies of the countries in the region are changing and growing rapidly, and this leads to the legal markets, and often the law itself, evolving at a swift pace. From the introduction of the new Insolvency and Bankruptcy code in India and the development of the competition regulators and regimes in Southeast Asia, to the US-China trade war and one-belt-one-road, the everchanging nature of the economies and, to a lesser extent, the legal systems across the region, makes the legal market particularly fluid. As a result, lawyers in the region are required to be equally agile; changes in the law, the economy or the workflow of a particular firm leads to experienced lawyers retooling to a different practice area, moving to different jurisdictions or even setting up new offices.

CC: Briefly, what are the top trends and stories driving change in this region?

JW: It’s hard to pinpoint only a few trends given the diverse nature of the economies and countries in the region. With that disclaimer, I am happy to try! I suppose in recent years the big trend has been the rise of China and, less well documented in the West, the rise of several other jurisdictions in the region both economically and politically. China, India and several countries across Southeast Asia are experiencing – or were experiencing, pre-Covid19 – rapid growth and economic development, with South Korea and Japan also having developed significantly in the preceding half century. In such a globalised world, corporates from large multinationals to SMEs require legal advice in the region and both domestic and international firms are competing fiercely for market share. In addition, the one-belt-one-road project has been a hugely significant regional development, with increasing investment from China into neighboring countries and generally increased spending on infrastructure development.  

"...the economies of the countries in the region are changing and growing rapidly, and this leads to the legal markets, and often the law itself, evolving at a swift pace."

Another interrelated factor has been what some have described as the increasing protectionism or the growth of economic nationalism, both globally and specifically within the region. The US-China trade war, and the spillover and effects it is having on investment in the region, is one obvious example, but the South Korea-Japan trade war and tensions between India and China, amongst other factors, have also significantly impacted investment flows.

CC: The world’s gaze is on the Asian tech market: what are the other growing sectors in Asia that we don’t hear about?

JW: Tech is such a broad term that it slightly obfuscates some of the growing sectors we are seeing in Asia. E-payments and FinTech, InsureTech, Health Tech, ICT; all booming in several countries across the region. Elsewhere generally, financial services, healthcare and more traditional manufacturing such as textiles and automotive components are all seeing strong growth in foreign direct investment, with manufacturing growing particularly in Southeast Asia, driven in part by the US-China tariffs war.  Renewable energy investment has also increased significantly across Asia in recent years.

CC: Some are speculating that this is the age when the balance of power shifts away from the US and towards Asia. What do you see that substantiates this?

JW: I would say it’s probably the wrong lens to view it through, a rising tide lifts all boats, after all. In my view, what we’ve seen is the emergence of the multipolar world and an unparalleled and welcome improvement in the development, living standards and wealth of many countries across Asia. With this rise in purchasing power for individuals in Asia, we’ve seen multinational, often American, corporates acting to tap into this growing wealth and I would expect to continue to see a large volume of investment into the region and, perhaps more interestingly, investment between countries within the region. That said, the dollar firmly remains the international reserve currency and American corporates, investors, and more pertinently law firms, are also set to benefit from Asia’s economic rise.

CC: will the National Security Law (NSL) have an impact on commercial law firms practising in Hong Kong?

JW: What a very difficult question! For firms operating in Hong Kong and across Asia, eyes are focusing on whether such developments lead to multinational corporates relocating their Asian headquarters to other regional hubs such as Singapore. Some might, but the reality is that Hong Kong remains the gateway for international corporates into China and China’s economic rise means corporates are unlikely to adjust their strategies. Hong Kong is a very competitive market for international law firms, and we’ve seen several firms open and close shop in Hong Kong in recent years. Most international firms, with a few exceptions, have small offices in Hong Kong. Due to the competition and fee pressure many firms end up losing money, but rightly see Hong Kong as a jurisdiction where the firm needs a presence to be able to fully service its clients and view this as the cost of doing business. I don’t see that changing despite recent political developments.

CC: What other news stories and market trends would be useful for junior lawyers and students to know about?

JW: I suppose one of the most pertinent developments would be the increasing competition for work from Chinese firms. From the thousands of interviews that we conduct with clients active in the region each year, a clear consensus has emerged that the quality of service offered by PRC firms has increased significantly in recent years. The growth of Chinese firms is faster than anywhere in the world and PRC firms are increasingly competing with international firms for both work and talent, with several high-profile native Chinese partners moving from International to PRC firms in recent years. However, the benefit of the international firms’ networks will undoubtedly mean they will continue to attract top tier clients and mandates for the foreseeable future, although many PRC firms are now starting to expand their footprint with offices overseas.

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