Several U.S. law firms have established offices in the People’s Republic of China (PRC), typically in major cities like Beijing, as well as in smaller locales. Among these firms is Dechert LLP, a multinational entity with offices in twenty countries, including several in Asia. Dechert, which has offices in both Hong Kong and Beijing, is currently contemplating closing its Beijing office. This decision impacts only three lawyers, as stated on their website, but the firm has informed its associates of the potential move.
Many other law firms with a presence in Asia are considering similar actions. This trend is driven by geopolitical tensions, a declining capital market, and economic difficulties in the region, prompting these firms to reconsider their ties with China and neighboring countries.
China, the world’s second-largest economy, has welcomed U.S. trade for decades, leading nearly 650 multinational law firms to establish offices there. However, in recent years, about 100 of these firms have reduced their presence, according to legal database Leopold Solutions. This trend persists despite a post-pandemic resurgence in business activities.
For U.S. firms specifically, the number has decreased slightly from sixty-four to sixty-one as of June 2024, with further declines anticipated by year-end. Dechert, for instance, has announced plans to close its Beijing office by the end of the year. The firm will continue to serve its Asian clients from its Singapore office, which it believes will maintain its service quality for the region.
Another firm, Weil, Gotshal & Manges, headquartered in New York, closed its Beijing office in March 2024, relocating its China-based operations to Hong Kong. Weil, Gotshal & Manges, which employs over three hundred lawyers outside the U.S., has raised concerns about the challenges faced by small businesses abroad, particularly due to limited credit availability and declining retail sales.
Legal consultants cite several reasons for U.S. firms exiting China, including issues with attorney-client privilege, due process under Chinese law, and concerns over recent cybersecurity and espionage legislation in China. Experts agree that the business environment in Mainland China is likely to deteriorate further before any improvement is seen, posing significant challenges for U.S. interests in the region.
The upcoming U.S. elections add to these concerns, as continued tensions with China are expected regardless of the election outcome. Since 2017, reports from the Chinese Justice Ministry have indicated a decline in the business of U.S. law firms in China.
In May 2024, Morrison & Foerster announced plans to close its Chinese office by fall, intending to manage its legal work for Chinese clients through its Shanghai or Hong Kong offices and other international locations, including Tokyo and Singapore. Similarly, Mayer Brown, based in Chicago, has decided to shut down its operations in Hong Kong, Beijing, and Shanghai.
The U.S.-China Business Council, a nonprofit established in 1973, aims to enhance business relationships between the two nations. It works to eliminate trade and economic barriers through its offices in Washington, Beijing, and Shanghai. The Council provides valuable services to multinational firms, hosts events to foster better relations, and educates American businesses about cultural differences, which is crucial during these challenging times.
As more U.S. law firms close their offices in China, it raises the question of whether other businesses will follow suit.
Several U.S. law firms have established offices in the People’s Republic of China (PRC), typically in major cities like Beijing, as well as in smaller locales. Among these firms is Dechert LLP, a multinational entity with offices in twenty countries, including several in Asia. Dechert, which has offices in both Hong Kong and Beijing, is currently contemplating closing its Beijing office. This decision impacts only three lawyers, as stated on their website, but the firm has informed its associates of the potential move.
Many other law firms with a presence in Asia are considering similar actions. This trend is driven by geopolitical tensions, a declining capital market, and economic difficulties in the region, prompting these firms to reconsider their ties with China and neighboring countries.
China, the world’s second-largest economy, has welcomed U.S. trade for decades, leading nearly 650 multinational law firms to establish offices there. However, in recent years, about 100 of these firms have reduced their presence, according to legal database Leopold Solutions. This trend persists despite a post-pandemic resurgence in business activities.
For U.S. firms specifically, the number has decreased slightly from sixty-four to sixty-one as of June 2024, with further declines anticipated by year-end. Dechert, for instance, has announced plans to close its Beijing office by the end of the year. The firm will continue to serve its Asian clients from its Singapore office, which it believes will maintain its service quality for the region.
Another firm, Weil, Gotshal & Manges, headquartered in New York, closed its Beijing office in March 2024, relocating its China-based operations to Hong Kong. Weil, Gotshal & Manges, which employs over three hundred lawyers outside the U.S., has raised concerns about the challenges faced by small businesses abroad, particularly due to limited credit availability and declining retail sales.
Legal consultants cite several reasons for U.S. firms exiting China, including issues with attorney-client privilege, due process under Chinese law, and concerns over recent cybersecurity and espionage legislation in China. Experts agree that the business environment in Mainland China is likely to deteriorate further before any improvement is seen, posing significant challenges for U.S. interests in the region.
The upcoming U.S. elections add to these concerns, as continued tensions with China are expected regardless of the election outcome. Since 2017, reports from the Chinese Justice Ministry have indicated a decline in the business of U.S. law firms in China.
In May 2024, Morrison & Foerster announced plans to close its Chinese office by fall, intending to manage its legal work for Chinese clients through its Shanghai or Hong Kong offices and other international locations, including Tokyo and Singapore. Similarly, Mayer Brown, based in Chicago, has decided to shut down its operations in Hong Kong, Beijing, and Shanghai.
The U.S.-China Business Council, a nonprofit established in 1973, aims to enhance business relationships between the two nations. It works to eliminate trade and economic barriers through its offices in Washington, Beijing, and Shanghai. The Council provides valuable services to multinational firms, hosts events to foster better relations, and educates American businesses about cultural differences, which is crucial during these challenging times.
As more U.S. law firms close their offices in China, it raises the question of whether other businesses will follow suit.
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