Smoothing the Silk Road: A China-CEE Round Table

Round Table Participants: 

• Susan Wang - Counsel at Dentons Hungary (Host)
• James Qin - Legal Affairs Director of Huawei for CEE
• Jiayan Zhu - Senior Associate at Wolf Theiss Austria.

CEELM: To start, could you tell us how you ended up in Europe and what your main tasks are here? 

Jiayan: I am based in Vienna, where I’ve lived since I was ten years old. I have been with Wolf Theiss since 2013 and I am a corporate/M&A lawyer fully-qualified in Austria. I am responsible for maintaining the Chinese relations of Wolf Theiss’ Vienna office with a special focus on advising Chinese companies doing outbound investments in Europe. Because the Austrian market, compared to the rest of the CEE countries, is less interesting for Chinese investors, I deal with the entire CEE region in assisting local colleagues in deals involving Chinese clients.

Susan: I am a Chinese and US-qualified Counsel in Dentons’ Budapest office and head of the firm’s CEE China Desk. I came to Budapest one and a half years ago, after working for Denton’s Beijing office. The CEE market is completely new for many Chinese companies, and they find a lot of potential and great project opportunities here, which, in my opinion, will continue to grow in the future. I have over ten years’ experience helping Chinese investments abroad, so when the management of the firm decided that they needed a Chinese lawyer here, they brought me in.

James: I have been based in Warsaw for more than two years now. Before that I was based in Egypt for over six years as Huawei’s Legal Director for the North Africa region. In my experience, compliance is the most important issue for Chinese companies doing business in this region, which they must pay more attention to. Compliance issues such as the GDPR, employment, competition law, export-import, etc., require our presence here.

CEELM: When it comes to the “China” part of your job, what exactly is expected of you?

Jiayan: At Wolf Theiss our first move was to make road trips to China and to visit existing clients and refresh the relationships by visiting local law firms, because we often work on a referral basis. Other times we just went to introduce ourselves, to let them know who we are, what kind of legal assistance we can offer to Chinese clients when doing business or investing in CEE. In my role, I am also involved in the communication part with Chinese clients, as most of the time it’s easier if you have someone who speaks their language. I am sort of the liaison person; any Wolf Theiss deal involving Chinese counterparties, I know about it, and they go through me. If necessary I also travel abroad for these deals.

Susan: I see myself as a bridge for this region and a valuable source of input for Chinese clients. I introduce the counterparties, I deal with the meet-ups and the networking processes, and I help manage cross-border transactions for clients; that is why I travel frequently to China. I deliver information about this region to Chinese investors and about China to European investors. Although Dentons has a huge presence in China, they don’t always have all the necessary information and perspective that I have, by working here. 

We obviously get a great amount of help from the Dentons China office, and we work with them frequently, but it is very helpful to be present on the site, to catch and to present opportunities immediately. I think I can say that any inquiry that is related to this region somehow ends up on my table, and the fact that Chinese companies contact me first on many occasions is a great advantage for Dentons.

CEELM: How significant is Chinese business to your law firms, and to the region itself? Is this interest growing, or shrinking?

Susan: In my opinion it is growing, and there’s a great deal of evidence. For example, FDI is getting bigger. Whether it reaches our office, or other firms, we see that more and more Chinese companies are coming to this region. For the moment, I would say that Poland, the Czech Republic, and Hungary are the most attractive destinations for Chinese investors. (Russia as well, but that’s not part of my network). For myself, I definitely have more clients now than when I started my job here. Plus, I also see that their strategies involve long-term plans, so they will probably stay longer.

Jiayan: I absolutely agree with Susan, I also see growth in our region. Bosnia and Serbia are also points of interest when it comes to infrastructure projects, for example. I think it’s because of the One Belt, One Road Initiative. One reason behind might be that they are not yet EU countries so might be easier to enter these markets.

James: They are actually building a highway between Serbia and Hungary, so business must be good. 

CEELM: Turning to you, James. Why exactly does Huawei need to have a Chinese professional in charge of the CEE region? 

James: I am also like a bridge between the two cultures and the two teams. I am an HQ guy, so I can better convey the HQ messages and make sure that the teams are on the right track. 

Second, regarding my daily job, I am also here for the contract reviews, for contract negotiations, and if there’s any potential dispute, I am here to react immediately. Compliance, as I mentioned before, is very important here: the GDPR, cyber security, competition law – understanding them I am able to communicate these CEE-specific needs and concerns back to HQ. 

Third, as you may know, for big projects we have subcontractors, different customers, and sometimes during the operations of the business there tend to be disputes, which we have to handle as fast as possible. Last, but not least, we have to follow up on local legislation processes closely, we need to get involved, to speak our opinion – some sort of lobbying.

CEELM: The Chinese judicial system is different than the European. Do you spend much time explaining to your Chinese colleagues why things are different in cases here? Or do your superiors understand and don’t worry much about it?

James: My bosses at the HQ understand these things pretty well, and I must add that we have some really badass colleagues in the European markets (laughs), thus, when it comes to disputes, I think we are well-prepared. 

CEELM: Do you work with external firms when it comes to disputes? How often do you personally interact with external counsels?

James: I speak with them often. For me it is important to win their recognition and respect, and it is important that they also know that I understand their culture. If these conditions are given, we can trust each other and fight together. When it comes to litigation, we do work with external firms, but the core part of it is mastered by us, because we obviously know our company better, so we make decisions together with the law firm.

CEELM: How big is your legal team and how many of them were hired by you?

James: Currently there are 15 legal counsels reporting to me. Three of them are in Warsaw (where one of them is, like me, from China), one is in Hungary, one in Sweden, one in Denmark, one in the Czech Republic, one in Austria, two in Greece, one in Bulgaria, and one in Romania – basically, everywhere from the North to the South. Answering your second question: only three of them were hired by me. 

CEELM: Have they ever told you that “you don’t understand CEE as well as we do?”, or do they have full respect for you and always follow your lead? 

James: Maybe I am too respected – or maybe they are too polite – but so far no one has told me such a thing (laughs).

CEELM: How often do you each go back to China now?

Jiayan: I was just there last month. But generally, I go once or twice a year.

Susan: I actually go back quite often, I would say once every two months, mostly because of work.

James: Usually I also go home twice a year, for various reasons, like training, workshops, and family of course. 

CEELM: All right, let’s talk a bit about the challenges of adaptation. What are the differences for lawyers between this world and the one that you come from?

Susan: I could share a lot on this topic (laughs). I spend most of my time on bridging the gap between the expectations of the Chinese clients and the services of local lawyers and firms, whose job evidently sometimes is limited by the local culture and legislation. It’s very different working here, and I must say that even after one and a half year, I am still adapting to this part of the world. Maybe I am just too slow (laughs), but the mindset, the working style of the people, is all so different, it just takes time to get used to it. 

One particular difference is that Chinese clients may not have worked out all the necessary details before they start to invest. That causes a lot of difficulty such as delaying the project, causing more work or costs than they expected when they come to this part of the world, for here, in my experience, people like to strategize, to take their time to plan, and map the steps that they would like to achieve in detail. 

Another thing is that Chinese people do not like to talk in specifics, so when they talk to you about a business, you may have difficulty understanding their goals. So on many occasions it is my job to help both sides understand each other and find solutions.  

CEELM: I’ve actually heard from many lawyers in CEE that sometimes their Chinese counterparts move more slowly than they expect. Why is that?

Susan: It is true, and mainly because the people that work on the actual deals and cases are not decision-makers. These processes are going to upper-upper levels, and this takes time. If the head of the company has already made a decision, the implementation won’t take much time; that’s much faster.

Jiayan: I faced similar situations in tender procedures and projects dealing with state-owned companies. It really takes a long time for them to get their approvals, so there were cases on tender processes when they got back to us a month after the deadline, and all we could say was, “sorry guys; you’re too late.” 

Another important difference that is worth mentioning, in my opinion, would be the know-your-client procedures. Chinese companies are not very familiar with this step, so we have to explain to them why this is an important requirement, why they have to share their information, it seems that in China this is not a common practice.

James: Again, from a cultural perspective, I would say that respect for the rules and the law is stronger here than in China. The cost for breaking the law is low there. Lately there have been some changes, and we’ve seen some improvement, but there is still a gap. For myself, I respect the law. Since I work in this field, I believe that one must trust and believe in the rules, otherwise you cannot lead a team and run a business. As for the slower moving, from a cultural perspective, there is a Chairman-culture in China for decision making, so the best way is to find the proper way to transfer your message clearly and timely to the Chairman, then it will proceed faster.

Susan: We have a short history with the rule of law, and traditionally Chinese companies didn’t even have legal departments, so often the law was ignored or forgotten. Twenty years ago if you said that you were a lawyer, no one would take you seriously. Today lawyers get more and more respect, their social status is increasing, but I can see even today that many clients simply do not want to spend much on legal services.

CEELM: Remaining on the subject of cultural differences, it is said that in China the answer is always “yes.” Is it true that when it comes to business Chinese clients simply find it difficult to say “no,” or is that incorrect?

James: This is definitely a cultural thing. For us it is indeed difficult so say “no” directly. Traditionally in Chinese culture people are even afraid of litigation, for it is seen as a shameful activity that destroys harmony, even if it’s only business. 

CEELM: Do you have to fight this impulse? Did you have to learn how to say “no” in your daily work? 

James: From this perspective, I am quite multinational, so I can say “no.” But you need to know when and how to say it. 

CEELM: Susan and James, you both worked in China before moving to Europe. Was it easier to be a lawyer at home than here? 

James: For me, personally, it is easier here. You can calm down and develop more, there is less distraction. In China there is a lot of noise. In Europe, you can allow yourself to dive deeply into one topic or area, and you can become a top expert in a field, without facing interference from so many things. 

Susan: For me, personally, it is difficult to work here. I grew up in China and I was used to following older habits and to being part of a social system that I knew, and I had a clear idea about what others were expecting from me. Here, I find it difficult knowing which voice to identify with. If I have to make a decision, every lawyer, each colleague has a different opinion or a different suggestion, so for me it’s hard to tell which way would be the correct or the best one. In China there is more of a hierarchy, and more concrete suggestions are presented. I am not suggesting that democracy is not good (laughs), but I think both options have their own strengths.

CEELM: How do you all feel about working here, about helping Chinese companies from here? 

Jiayan: I feel comfortable here, but I am actually planning to move to Asia sometime in the future for a short period of time – maybe Shanghai or Hong Kong – to experience working there too. I want to get familiar with their systems, their ways of working. It sounds very different than here (laughs).

Susan: This is my very first working experience outside of China, and despite the challenges I’ve mentioned, I really like to work here. I like the environment and the people. It’s a very unique experience for me.

James: It is definitely a unique experience. For myself, I came, I learnt, and I became part of this work. I am very proud of myself for what I have achieved. I don’t know yet for sure how long I will stay, although according to our estimates in two years’ time I will probably go back to China. 

With that the round table drew to a close. We would like to thank Susan Wang and Dentons for agreeing to host the conversation, and our thanks to the participants for their sharing their thoughts with us. 

This Article was originally published in Issue 5.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.