Lawyer Jun Wei explains the mistakes foreign companies make in China

Jun Wei draws attention to some of the many changes she has seen in China since she has been practising law

Please explain a bit about your career path and how you got to your current position?

In 1981, I graduated from Beijing University Law School as one of just 18 graduate students in China. I then went to the National People’s Congress Legislative Affairs Commission, where I worked for about seven years before I left China to continue my legal studies at Harvard. I then started practising law in New York in 1990.

As it wasn’t a good time for me to come back to China, I started private practise in New York and I was the first person from my class to be made a partner in 1997.

I worked in New York for quite a long time and then in 2002, when Hogan wanted to open its Beijing office, I joined them as Managing Partner there. I went on to become co-Managing Partner of the Shanghai office in 2004 and the Hong Kong office in 2005. When Hogan Lovells were combined in 2010, I became the first Asia and Middle East regional representative on the board there.

Why did you decide to study law in that period?

I was one of the people sent down to the countryside as a very young kid so didn’t have a middle or high school education. Because of the period in which I grew up, I saw and experienced a lot and although I was very young at the time, I had big ideas and wanted to change the country. At the time there was some legal theory and I read a lot of books, I studied the UK and French legal system, which was about the balance of power and I thought that could be good for China. I thought law was the way to make a change.

You were trying to change China then?

Correct, that was part of it. Because I was one of the first and youngest to graduate from Beijing University and only one of only two female law graduates, I could select what I wanted do. In China at the time, the legal system was very important and I thought, if I got to congress and joined the Legislative Affairs Commission, I could draft laws, which if they were passed, everyone would be able to follow. That was my idea at the time, as an honest, young, idealistic law student.

I think in some way I did participate in changing the early laws in China. I was part of the drafting, part of the investigation – and I felt good about it. But on the other hand, after several years working there I also felt disappointed that so few good ideas were implemented.

At the time there was a unit who helped translate laws from other countries, particularly US law. We could see a lot of good provisions of US law and I thought it was a good idea to learn and copy those. But I didn’t understand why our laws were drafted in certain ways but not another. I was disappointed and realised there was no further development for me there so I would need to go to the source of those laws. That’s why I left and went to the US.

Relationships are very important when it comes to business in China but will that diminish as rules over trade and investment become more standardised?

Yes and no. I agree that, in general, China has changed from a relationship dominated society to a rule of law society. In the past because there weren’t many rules, relationships were the most important things when doing business. But in the past 30 years I have witnessed a change from a relationship dominated society to one in which you have to follow the rules.

So, I am happy to see this change but that said, I think guanxi or relationships are still an important part of doing business, or anything else. This is probably true not just in China but also in other places around the world, including the UK and US.

Sometimes you need to know someone to knock on a door but if you don’t have the skillset to do the actual work then knocking on the door doesn’t mean anything. I think the skillset is much more important than the relationship.

I don’t think China’s legal system is advancing as fast as its economy

Is China’s legal system advancing as fast as its economy or is there a lag?

China’s legal system has developed a lot since I started to study it. I am really happy with those developments and happy to be have contributed to shaping the legal system. But on the other hand I totally agree with you. I don’t think China’s legal system is advancing as fast as its economy – it’s much slower and further behind.

Because China has a central government, local government and lots of vertical hierarchy, there are a lot of inconsistencies in the rules and laws, complicating the development of the legal system, making it hard to keep up with the pace of economic development.

Those kind of inconsistencies between different bodies and different locations makes the lag even worse and impacts enforcement as well. The legal system is not just the rule itself, but enforcement as well. Such inconsistency hugely impacts enforcement.

The law should reflect the development of the economy, but it should also lead the economy in certain ways. I don’t think Chinese law is there yet.

What are the biggest misconceptions that international investors or businesses have about China?

We currently hear things like ‘all Chinese companies steal IT’ or ‘that China wants to control the world with the Belt and Road’ but I don’t see those things in the small, micro-aspect perspective that I see in my everyday work representing clients.

When we talk about the change from a guanxi dominated society to a rule of law society, from my personal point of view, many foreign companies, including multinational companies, probably don’t really appreciate how much has changed.

I see a lot of investors come to China who forget some of the most basic things that they would do if they were doing business in their home country. People talk about guanxi being the most important thing but they often overestimate the value of this and make mistakes that set them off in the wrong direction. They think that the guanxi they have in one place will enable them success but they forget to do due diligence in an area, of an industry or of a company. If a particular agency or official promises preferential treatment, then it’s probably not in compliance with central government rules or laws.

I still see many companies caught out because they forget the basic due diligence that they would follow in their home country.

Likewise, I see a lot of disappointment in British, US or European companies when a Chinese company approaches them. When a Chinese company wants to make an investment or an acquisition they forget to ask very basic questions. They might spend a year or more in negotiations but they haven’t found out first if the company has the right government approvals or if they have cash on hand. There is a lot of miscommunications.

I still see many companies caught out because they forget the basic due diligence that they would follow in their home country.

Which sectors are currently of most interest for investors?

In general, the government encourages both inbound and outbound investment in tech companies. Fintech and other TMT [Technology, Media and Telecoms] and life sciences are big industries that the Chinese government encourages. The other sector is renewable energy. Not energy in general, but renewables are currently a big area for outbound investment.

I saw that, at the Congress, the Chinese government discussed opening up all new manufacturing investments by foreigners – so this is a big leap forward. But we will have to wait and see the details.

As Britain looks like it will leave the EU do you think that offers further opportunities with trade and investment to the UK?

To be honest with you, I’m very, very confused about this. When the referendum happened it was big blow to many Chinese investors because in the past, many Chinese investors in the UK thought about the UK and Europe as one region. They thought of the UK as a window into Europe – because of familiar legal systems, good capital markets and the legal environment – but after the referendum, some Chinese investors stopped investing into the UK because there was so much uncertainty. Even now lots of people are uncertain as to whether they should invest into the UK or not.

From a long term point of view, I don’t think it will slow down Chinese investment in the UK too much because the UK is one of the most important markets for Chinese investors and is so difficult to ignore. So long term, I don’t think it would make much difference but currently it will slow. Personally, I hope it doesn’t happen, I like globalisation. Business is so intertwined nowadays and moving forward it’s going to be further intertwined. I don’t like separation.

As a female business leader, what obstacles did you overcome during your career?

I could say a lot. If most of your colleagues are male or your peers are male, you sometimes feel there is no community – if they want to go to a bar or play golf they don’t want you to be part of it. So there is a lot of those kind of things but that’s not the major problem.

I think the glass ceiling is still there. When I started my legal career as a lawyer, I was always worried a female lawyer would be looked down on by my peers. I still recall how I would take two male colleagues along to an important client meeting because I wanted to add weight. I didn’t think going alone would have enough impact. But the client asked the men questions they couldn’t answer and I had to answer all the questions myself. In those days, it happened a lot. I would even dress more like a man by adding big shoulders to my suits and trying to talk like a man.

I still recall the day when a client of mine, who was a very successful businesswoman, told me: “Jun you should just try to be yourself. Be proud of your identity; don’t try to be like your male colleagues – you can’t. Be proud of yourself; you can be much happier and much more successful.”

I really took her advice and learned that gender does not give rise to any advantage. Only professional ability can prove your competency. As women we should be proud.

What advice would you give to other women looking to succeed in the corporate world?

I really think the corporate world is like a law firm. It’s dominated by men, although there is a lot of change and I see more and more women working there, being promoted, and achieving lots.  There are more and more female leaders, but I still think it is dominated by men in general.

So, I would like to say to my female peers – we are equal to our male colleagues. We work hard (from my point of view, most females work as hard if not harder than men do), and we are just as smart as our male peers.

Female colleagues in the corporate world offer a different perspective – we are very unique so just believe in yourself. Females, particularly Asian females are often shy and don’t want to say how good they are. I want to tell them: “Don’t be shy to tell others what a good job you’ve done”. Don’t be afraid to tell others what you can do. I think the obstacles and challenges happen everywhere in life and work but just believe in yourself and that will create a positive difference.

I also want to say the same for men. I really think creating an environment allowing everyone to reach their full potential, irrespective of their gender, is the core value of the corporate world and sustainable development. Tomorrow’s success largely depends on it, so I really want to say to my fellow male colleagues, you have a very important role to play. It is the responsibility for all of us to make the effort. I do I believe that in working together we can make a positive difference. So making women equal really depends on men’s contribution.