Norton Rose Fulbright, one of the oldest UK law firms in Hong Kong, has laid out plans to “pivot to China” as the city comes under increasing pressure from Beijing to align with the mainland.
Norton Rose is refocusing its Hong Kong business on work for mainland Chinese companies and banks, according to people at the firm. They added that the Hong Kong office would work to integrate more with teams in Shanghai and Beijing over the next five years.
The pivot to China by Norton Rose, a top-10 UK law firm by revenue, reflects how global businesses in Hong Kong are adapting to Beijing’s increasing influence over the city’s economy, politics and institutions, including its zero-Covid pandemic response.
The shift has already led to a change in the law firm’s recruitment strategy. In some practice areas, including equity capital markets, recruiters have been told to only consider potential candidates who can speak Mandarin.
“The reality in Hong Kong is that we can see a pivot geographically to China and we are seeing that reflected in the flows of work,” said Peter Scott, head of Europe, Middle East and Asia at Norton Rose.
“The relationship with China is even more important, so there is a pivot towards China in terms of the office and the skills that we need,” said Scott.
Norton Rose opened a Hong Kong office in 1976, two years after Slaughter and May became the first City law firm to establish a presence in there.
Global businesses have used Hong Kong as a springboard to mainland China and as a base for the rest of Asia. But as Beijing has moved to consolidate its power in the city, there is growing urgency to shift from expat staff to Chinese workers.
Psyche Tai, head of Norton Rose’s Hong Kong office, said there was a “localization” of some of the firm’s biggest practices “to see more Chinese people working with Chinese clients, and we use Chinese as communication.”
Tai said this pivot was taking place as the company was taking on more mainland clients. “We are having a shift in terms of more and more Chinese partners being made up, [whereas] a decade ago it was more expatriates and English speaking partners, ”she said.
About 300 Chinese companies make up 80 per cent of the value of the Hong Kong stock exchange. In 2020, mainland investors poured $ 270bn into the Hong Kong market, up from $ 1.7bn just seven years earlier.
“We need a blend of both local and international expertise, but the business trend is towards China and Covid-19 has also meant that from an expat perspective, people are not as attracted to Hong Kong,” Scott said.
Norton Rose, whose biggest clients include HSBC and AIG, is the latest international business to reconsider its Hong Kong strategy.
Both the Mandarin Oriental hotel group and Pernod Ricard have asked executives to move temporarily out of Hong Kong in response to strict pandemic restrictions. Bank of America is reviewing whether to relocate some of its staff to Singapore.
The head of a large recruitment consultancy in Hong Kong said similar changes were happening at other global companies.
“As expats retire they are most likely to be replaced by Mandarin-speaking people,” he said. “The old set-up of having a local team who speak Mandarin doing the deal, but the guy at the top is white, that will change across the board.”