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"There's a Chinese perception that Canada isn't receptive to foreign investment, but I haven't seen one deal that's been rejected by the Canadian government. Not even the Noranda deal." — ROBERT KWAUK, BLAKE CASSELS & GRAYDON LLP clients may enter into a deal which might affect their overall structure. They may have Canadian reporting requirements, Canadian regulatory or financing issues. The China component may straddle its other operations, and this is where we provide value-add." Lang Michener LLP advises Chinese companies that do business in Canada. In May, it opened its first China office in Hong Kong in order to market its services to companies looking to invest in Canada. Stephen Wortley, chairman of its China practice group, says a typi- cal transaction might involve helping a Chinese state-owned enterprise acquire a Canadian company, and then list it on the TSX. The listed company may then turn around and acquire assets back in China, or elsewhere, at which point, the transaction becomes outbound. "You find that a circular path emerges," says Wortley, referring to transactions that follow when Chinese companies invest in Canadian interests. Despite opening its Hong Kong office in a fairly bad recession, Wortley says it was a wise move. "We finalized our busi- ness plan in late 2008, just as the markets fell. At the time, we were still getting work from China. We figured the worst possible thing was not to pursue the opportunities before us, not to pursue our niche. We figured our business plan was too good to turn down." One law firm that's weathered several financial storms is the Beijing office of Blake Cassels & Graydon LLP, headed by partner Robert Kwauk. He arrived in Beijing alone in the midst of the 1997-98 Asian financial crisis. His office now employs three Canadian lawyers and five PRC lawyers. At the Beijing office, equal focus is placed on outbound and inbound deals, though Kwauk says the dollar value of Chinese investments into Canada is larger. "Provincial trade reps were trip- ping over one another to open offices in China," Kwauk quips, referring to busi- ness development delegations from B.C., Alberta, Ontario, and Quebec. When asked about barriers to Chinese investment in Canada, Kwauk says: "There's a Chinese perception that Canada isn't receptive to foreign invest- ment, but I haven't seen one deal that's been rejected by the Canadian govern- ment. Not even the Noranda deal," he says in reference to the failed 2004 merg- er between China Minmetals Corp. and Quebec mining company Noranda Inc. "If a deal fails between a Chinese com- pany and a Canadian one, it's not due to the Canadian regulatory or approval process. It's because the parties couldn't reach a commercial agreement." In 2007, China established a US$250- billion sovereign wealth fund, with a mandate to invest in overseas corpo- rate assets. So far, it hasn't been shy in spending that money: in July it invested $1.7 billion in Vancouver-based Teck Resources Ltd. Potter says China's invest- abroad program is being streamlined to ease restrictions, making it easier for Chinese companies to invest overseas. Though BLG focuses on the outbound market, it's preparing to handle more Chinese investments into Canada. With all eyes on China, it's easy to forget that across the East China Sea lies Japan, still the world's second-largest economy. Japan is an important trading partner for Canada: it represents the third-largest market for Canadian goods exports ($9.2 billion in 2007). "As the number two economy in the world, Japan is still a major driver of the world's econ- omy," says Anthony McArthur, manag- ing partner of Davis LLP's Tokyo office. "In metropolitan Tokyo alone, there are 30 million people, roughly the popula- tion of Canada. The types of activities you see here — the size, the scale, the breadth — are huge." Davis' Japan practice started after the Second World War, when the firm began acting for Japanese-Canadians forced from their homes and detained in intern- ment camps from 1942 to 1949. The firm sued the federal government to recover their clients' confiscated property. As Japan rebuilt its economy during the 1950s and '60s, Davis began representing major Japanese companies investing in Canada. Today, it has one of the nation's leading Japan practices, and is the only Canadian firm with an office in Japan. Davis' inbound work overshadows its outbound transactions. "By far, a big part of our Japan practice is representing Japanese clients," says McArthur. "Here in Tokyo, we help our Japanese clients with their ongoing investments and operations in Canada. Some issues are dealt with locally in Toronto, Montreal, or Vancouver, but we try to help on issues which reach their head offices." For Fasken Martineau DuMoulin LLP, the focus is also on the inbound work. "That's where you get the fees," says Mark Stinson, leader of the firm's Asia- Pacific practice group. "As you know, the Japanese economy is in bad shape right now. But on the other hand, there are several Japanese companies which are huge, and they have a lot of money. And there's also the strong yen. What they're trying to do is diversify their investments www. C ANADIAN Law ye rmag.com SEPTEMBER 2009 33