CBLJ FORUM BEIJING 2025

ACCORDING TO JOE ZHOU’S observations, the first half of 2025 painted a mixed picture for Chinese stocks in the US, marked by both a rebound and a growing divide. The rush to list in the US continued unabated, with 43 Chinese firms going public there in the first half, up from just 30 in the same period last year. At the same time, however, the US-China tech rivalry has spilled over into finance, putting these companies under significant pressure from multiple fronts.

Zhou cautions that politics and international relations are what ultimately drive the legal landscape. Even if certain US policies do not immediately affect these stocks in negative ways, the government’s underlying intent is something to watch closely.

“At CICC, we are in constant dialogue with regulators in mainland China, Hong Kong and the US,” he says. “This allows us to understand and even help shape the rules, ensuring that financing channels for Chinese companies remain open.”

Lu Zaiguang pushes back against the “clickbait” narratives predicting doom for US listings. As he sees it, the process for Chinese companies to file for overseas listings has become a well-trodden path – a far cry from the early days of the new rules, when everyone was “feeling their way across the river”.

“From a technical perspective, we don’t see major regulatory shifts dealing a fatal blow to the capital markets, not when there are still professional intermediaries and high-quality companies,” he says.

Helen Gu notes that companies are grappling with a growing web of complex regulations in different markets, driving compliance costs sky-high. On top of that, each country operates from a fundamentally different legal standpoint.

She points to AI as an example of this, with China focused on registration, Europe on ethics, and the US on innovation. This makes it much harder for global companies to stay on everyone’s right side.

“Do not panic,” she says. “Take ESG [environmental, social and governance], for example. We can look at it from a different angle – not as a regulation, but as a form of empowerment. It can elevate global compliance standards to a higher level, which I believe is a good thing.”

William Han breaks down his work into three core pillars: international compliance, business innovation, and revenue growth. He stresses that it is crucial for the legal team to make the case for its own value. Compliance has a cost, he explains, so in-house counsel have to demonstrate the value it delivers and how it helps the business.

“The key is to constantly blend these different areas, creating synergy between the units to generate a much greater impact,” he says.

According to Steve Lin, the US stock market has changed more in the past three years than it did in the previous 10 or even 15 years. He has spent the past two years diving deep into the nuances of US securities law and the mechanics of the stock market. “Take the time to understand new strategies, and be wary of information gaps and the traps they can create,” he advises.

When it comes to the new demands of our time on legal professionals, Ava Wang identifies two key shifts: the need for a multidisciplinary skill set – a departure from the old model of specialisation; and the ability to adapt to lightning-fast changes. But she notes these challenges make legal experts more vital than ever, allowing them to deliver greater value.

“The environment we’re in today is like navigating a sea full of hidden reefs,” she says. “But as long as we stay optimistic and proceed with caution, we can absolutely chart the right course for this era.”

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TIAN QI KICKS OFF the discussion by turning the spotlight on financial product suitability. She points out that the Administrative Measures for the Suitability Management of Financial Institution Products, released on 11 July, represents a major shift. It moves away from the old, fragmented approach of regulating by institution and by product, and instead establishes a comprehensive framework governing suitability for all financial products across all institutions.

Susan Wang recounts how China’s private equity sector has transformed in recent years, moving from a loosely regulated environment to one of sophisticated oversight. The industry’s regulatory framework evolved from the China Securities Regulatory Commission’s initial interim measures to the comprehensive regulations that rolled out in 2023. “On the ground,” she says, “funds used to be able to raise capital without even being officially registered. Today, there are incredibly detailed rules for every single stage of the fund lifecycle: fundraising, investing, management and exit.”

In Betty Xiang’s view, the PE space should be a relatively straightforward area for compliance, since its lifecycle is more or less process-driven. If a firm does its job correctly by properly classifying investors, conducting questionnaires, and completing the required dual audio-video recordings, it should not be on the hook for losses under the “seller’s duty, buyer’s risk” principle. Her observation in the past decade is that when angry investors sue over losses from wealth management or PE products, their main line of attack is almost always suitability.

She stresses that a properly executed dual recording can be a powerful shield for a financial institution during a regulatory audit, or in a dispute over investor suitability. “These regulations during the fundraising phase don’t just protect consumers, but also help financial firms by making the sales process more professional and sustainable for the entire industry,” she says.

Jiang Qiang points out that since most consumers now buy financial products online, digital sales platforms must have explicit suitability procedures built in. But he sees a silver lining for financial institutions: A well-designed system with robust and effective steps can itself become a powerful defence, potentially shielding the firm from liability.

“The last economic wave triggered a flood of lawsuits and arbitrations, and those cases effectively rewrote the rulebook,” he says. “As we head into the next economic cycle, today’s rules will face their own tests and challenges, and that is what will continue to push practical development forward.”

Iris Chen argues that for regulators, it is not enough for a financial product to have a reasonable rating. Equally crucial is that it is sold to the right pool of potential investors. The regulatory ground has been shifting quickly, she notes, because China sees embracing international standards, the rule of law, and market-driven development as its core strategy for navigating geopolitical challenges.

“From a rule-of-law perspective, we are living in a great era for consumers and investors,” she says. “When regulators fine-tune the rules for the fund industry, they do so not just to keep things going steadily, but also to boost consumer confidence and ensure the industry can grow on a solid, sustainable footing.”

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LI ZHAO MODERATES the panel, facilitating the discussion with six panellists examining four key issues: (1) whether capital reduction constitutes a mandatory prerequisite for company repurchases; (2) the timeframe for exercising repurchase rights; (3) the negotiation dynamics between different investor tranches regarding repurchase priority; and (4) limitations on founding shareholders’ liability.

Duan Tao observes that capital reduction issues reflect their historical context. In arbitration practice, he notes, tribunals primarily examine the clarity of contractual terms and the target company’s operational status – factors that significantly influence the ultimate ruling’s direction. Addressing repurchase right timeframes, Duan argues that formation rights inherently fall outside statutory limitation periods, and that the mere passage of time should not automatically invalidate such claims. “When repurchase clauses are triggered, both investors and companies typically seek mutually beneficial outcomes rather than engaging in zero-sum negotiations,” he says.

From an investment firm’s perspective, Su Yanan advocates for proactive risk assessment and mitigation strategies. She recommends circumventing potential deadlocks in capital reduction through carefully structured joint liability clauses or contractual default provisions. “Default terms represent a strategic tool for investment institutions,” she says. “They serve dual purposes – effectively safeguarding stakeholders’ interests while creating constructive pressure for founders and companies to comply with capital reduction requirements.”

From both investor and investee perspectives, Kobe Liu proposes an innovative procedural pre-emption approach: “By embedding pre-agreed capital reduction consent clauses in shareholder agreements, future disputes can be circumvented through automatic triggering mechanisms.” On repurchase priority, Liu adopts a distinctive position of strategic investors, prioritising synergistic value over pure financial returns. “While economic benefits remain secondary in our calculus, these provisions serve as vital leverage points to ensure founder accountability,” he says.

He Qing emphasises that repurchase rights remain investors’ fundamental concern and entitlement. “Investment firms ultimately seek mutually beneficial outcomes, working to create business opportunities that enable portfolio companies’ growth while facilitating graceful investor exits,” she says. Addressing liability limitations for founding shareholders, He draws a crucial distinction between shareholding-limited and share value-limited obligations, which ultimately determine whether personal assets become exposed. She also stressed the primacy of contractual autonomy alongside the principle of “good-faith realisation” when enforcing such provisions.

April Li also characterises litigation as a zero-sum game, advocating for greater focus on alternative dispute resolution mechanisms. She cautions investors against readily accepting exercise period clauses, urging scrutiny of such provisions. Li also highlights emerging considerations with government-guided funds: “Quantitative metrics tied to local reinvestment requirements are evolving into distinctive repurchase triggers,” she says. “These mechanisms may well establish new equilibrium points in investment agreements.”

Tina Zhang identifies repurchase priority as fundamentally reflecting the negotiation dynamics between new and existing investors. While acknowledging later-round investors’ higher valuation costs, she maintains that early-stage backers should not readily concede preferential rights. “Given extended capital lock-up periods and fund maturity pressures, we must safeguard exit pathways through careful contractual negotiations,” says Zhang. Her proposed solution involves trading concessions on liquidation preferences or veto rights as strategic bargaining chips.

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WITH HIS TRADEMARK light-hearted approach, moderator Geoffrey Sant introduces a robust discussion on the complexities surrounding asset recovery within US jurisdictions.

“Chinese companies venturing overseas essentially face a game of chance when it comes to legal disputes,” says Fu Tong. She outlines the multifaceted challenges in cross-border debt recovery: concealed assets; divergent legal systems; language barriers; cultural differences; stringent data protection laws; difficulties in obtaining information; and protracted enforcement timelines. She also highlights a growing market demand not only for Chinese firms pursuing overseas claims, but for foreign enterprises seeking redress in China.

Xu Yehong estimates an 85% success rate for enforcing Chinese arbitration awards in the US. She outlines the execution process for Chinese arbitral rulings in American courts, noting the critical three-year window to file enforcement applications with federal courts after an award is issued. For Chinese arbitration institutions handling international cases, Xu advocates aligning procedural and linguistic standards with global practices. “Asset recovery and enforcement in the US requires highly specialised technical expertise,” she says. “Successful outcomes depend on precise legal foundations, thorough asset investigations, strategic deployment of available tools, and meticulous advance planning.”

Carol Lee offers businesses three crucial recommendations: “First, engage specialist investigators working alongside legal counsel to trace debtor assets in the US. Second, meticulously maintain all documentation and correspondence with debtors. Third, act decisively to prevent asset dissipation.”

Concluding the discussion, Sant issues a pointed warning about linguistic pitfalls, advising against over-reliance on AI translation tools or third-party translation. He instead advocates harnessing language as a strategic asset to bridge cultural divides.

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MODERATOR WU JIEJIANG introduces the panel discussion, which focuses on changes and trends in anti-money laundering (AML) and international sanctions.

Steven Cao says that sanctions from Europe and the US have prompted many international financial institutions to adopt stricter loan investigations on companies. He suggests that borrowers can protect themselves by using countermeasure clauses and proactively working with financial institutions to conduct due diligence and compliance checks.

James Ma suggests that companies should avoid agreeing to all the conditions requested by large international financial institutions and review whether their agreements contain any “overbearing” clauses. He advises companies to engage with lawyers to narrow the scope of liability.

Ma adds that companies should establish anti-money laundering and anti-sanctions procedures and update their systems to reflect the latest UN sanctions lists.

Chen Lei notes that since the implementation of the new Anti-Money Laundering Law this year, financial institutions have placed greater importance on anti-money laundering enforcement. When companies co-operate with financial institutions to conduct due diligence, they now need to provide more information than before, including clients’ backgrounds and explanations for business decisions, and cross-border projects’ objectives.
 

Kristin Li advises companies to conduct thorough due diligence on new clients and to reject any excess funds from them. She observes that, as e-commerce trade grows, criminals are channelling illicit funds into the formal economy by selling popular products sold by international trading companies. She says that in-house counsel should pay attention to transactions involving virtual currencies, as they are harder to trace and investigate.

Dai Guanchun suggests that companies should prioritise expanding their legal departments to oversee export risks. “Chinese companies are growing rapidly, with listed companies becoming more international after going public,” he says. “In this process, it is essential to strengthen internal controls, including its governance and the board.” 

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When it comes to trade secrets protection, Xu Shaowen says that at the project initiation stage of R&D projects, companies should ensure all employees have signed confidentiality agreements that clearly define the scope of confidential information. Companies should also establish a confidentiality system and stipulate confidentiality obligations and non-compete clauses in employment contracts.

Kenneth Zhou suggests that company executives should use technology to prevent secrets from spreading. “In many cases, you need to rely on technology systems to restrict copying or downloading, so that files will automatically become inaccessible after being downloaded,” he says.

Zhou also recommends that once it becomes known from various sources that a key employee has joined a competitor, the company should immediately initiate trade secret litigation or pursue a combination of arbitration and litigation for non-compete enforcement

Melvin Zhang says companies can educate staff on trade secret protection. “Every quarter, we conduct an integrity education course where everyone watches videos of compliance cases that occurred within the company in the previous quarter … This has a strong impact on employees,” he says.

Leo Chen says many companies either do not follow the trade secret protection rules they have set, or fail to enforce them. “It is important to establish an internal regulatory framework if one does not exist. Once established, measures should be implemented and enforced,” he says.

Candy Sun says: “When addressing flexible employment arrangements, as a human resources provider, we protect trade secrets through system building and cultural advocacy.” She also mentions that in the ongoing process of trade secret protection, companies should continue to use external third-party audits, which can serve as a deterrent.

Jesson Wen says that there was once a client whose former employee had joined a competitor, and that litigation can be an effective strategy to influence the former employee’s mindset and emotions.

“We know that when it comes to non-compete enforcement, there is not only the arbitration stage but also two stages of litigation, which can take a long time,” says Wen. “During the process, the non-compete period may have passed. I believe while working at the new company, the former employee will not be so bold or so casual in leaking the former employer’s trade secrets.” 

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