Although Latham & Watkins’ announcement that the firm was shuttering their Shanghai office was maybe less earth-shattering that first appeared (the office has a single resident partner in Shanghai and the firm has stated it will consolidate operations in Beijing, relocating people as required) it is yet another episode in the unfolding narrative that western firms are retrenching in the PRC.
Ropes & Gray confirmed it is “shifting” resources from Shanghai to Hong Kong, albeit they insist the firm will maintain an office in the city. Dentons and Dacheng have undergone a well-publicised split (albeit for reasons seemingly more imposed upon them than purely strategic ones).
Now Proskauer Rose has announced it is withdrawing partners from Greater China and while it will maintain an office in Hong Kong with a senior consultant presence, it is a shift from the firm’s earlier enthusiasm for investment into the Chinese market.
And after Eversheds Sutherland’s recent unveiling of a referral partnership with KWM, it will be interesting to what degree it continues to invest in resources on the ground in mainland China especially. While it makes sense for the Anglo-US firm to maintain a presence on the ground on the mainland and work alongside its new partners, it would be surprising to see the firm target significant growth in its partner ranks there.
This follows earlier withdrawals and closures of Vinson & Elkins, McDermott Will & Emery, Orrick, Baker Botts, among others. New openings for western firms in Greater China are scarce. Meanwhile PRC firms continue to gain market share, and make inroads into Hong Kong.
This is a marked shift from 15-20 years ago when the most ambitious international firms were cementing their global ambitions with heavy investment in China and the most prestigious names in the market. Political tensions have undeniably played a part but the steady decline in numbers of partners and staff among international firms in the PRC has been notable going back years, even before COVID turned the world on its head. Once western firms were happy to ride out unprofitable situations in far-flung locations for strategic market share and projected long term profitability but recent news indicates that, for many, this journey, for now, is over.