Pick of the East

Capturing a slice of the Asian market means opening an office in the region, but where to go: Hong Kong, Singapore or Shanghai?
Orlando Crowcroft weighs up the options

The move away from traditional markets and towards Asia is certainly not a new trend - ever since the financial crisis, Jersey and Guernsey have been vocal about their need to woo the East as business in the West continues to struggle. But while some are content to talk the talk about Asia, many Channel Island firms have gone further, opening offices in Hong Kong, Singapore, Shanghai and Tokyo in an effort to put a face to the islands for clients thousands of miles away.

Ogier was among the first, opening its Hong Kong office eight years ago, while Mourant Ozannes followed in 2010 - around the same time Collas Crill opened a base in Singapore. Ogier has since opened offices in Tokyo and Shanghai.

Marcus Leese, a Partner at Ogier in Hong Kong, feels that the deluge of Channel Island firms moving to Asia has been a positive one, even if it equates to more competition between Jersey and Guernsey law firms for Asian clients.

“It"s incredibly helpful that there aren"t just one or two representatives of a jurisdiction,” he says. “Clients can see it"s not just Ogier here singing the praises of Jersey and Guernsey, but Ogier, Collas Crill, and Mourant all saying those things. There is real benefit in the momentum that a range of businesses can generate.”

Key to this is that Jersey and Guernsey came late to the Asian party. Law firms and service providers from the Caribbean - Cayman, Bermuda and the British Virgin Islands - have been in Hong Kong and Singapore for two decades, setting themselves up as the jurisdiction of choice.

Frances Woo, a Managing Partner at Appleby Global and an Asia veteran, says that Cayman, Bermuda and BVI in Asia are entrenched in Hong Kong, with Bermuda being present since the early 1980s and Cayman particularly well known as a jurisdiction for listing funds.

“The fact that Jersey and Guernsey came out here at the end of the 2000s and said "Here I am!" is a difficult proposition. It"s still very early days for the islands,” she says.

Leese, however, feels Asian clients already appreciate the effort. Indeed, he says, the success of Cayman and BVI should serve as an example for Channel Island firms of what can be achieved.

“We"re saying that we"re not just going to fly down here and take some business home with us, we"re prepared to invest and spent time and money and effort building relationships. It"s genuinely beginning to pay off over the four or so years I"ve been here.”

Needs must

It was the financial crisis that pushed Jersey and Guernsey into the arms of Asia. As traditional markets in London and Europe dropped off, the Channel Islands went from having too much work to not enough. A corresponding scrutiny of international finance centres (IFCs) from governments in the UK and the US also made the East - with its booming economies and softer regulation - look attractive.

“The recession was the key driver,” explains Leon Santos, a Partner at Collas Crill in Singapore. “That put a dampener on everyone"s business, and firms really had to look hard at where their new business was coming from. The intense focus on offshore accounts in the Western world has driven it a little bit, but it was the financial crisis that really hastened it.”

Channel Islands firms in the region vary in size, with Mourant Ozannes" 12-person Hong Kong office compared to more than 40 for Ogier. But whatever the manpower and base, Appleby"s Woo agrees that a firm commitment is needed from any business setting up there.

“You need to figure out what your strategy is, because having a presence here without significant investment and making significant inroads is not going to get you anywhere,” she says. “You can"t just dip your toe, you have to persevere and be patient and chip away and chip away. We"ve been here 25 years and we"re still chipping away.”

Decisions, decisions…

For firms wanting an Asian presence, the tough decision is where to set up home. When it comes to the choice between Hong Kong, Shanghai and Singapore, opinions vary. While Hong Kong is certainly well established, particularly in the funds space, Singapore has emerged as a massive private wealth hub with unparalleled access to south east Asia, including India and Indonesia.

Shanghai, meanwhile, has massive bureaucratic hurdles, but also huge benefits, bringing access to huge mainland Chinese firms. On the mainland, says Ogier"s Leese, a Mandarin speaker heads the firm"s office, while in Tokyo a Japanese lawyer takes the lead. Having secured business, both offices funnel work back to Hong Kong.

Then there is quality of living, says Woo, which often pushes foreign firms towards English-speaking Singapore rather than Hong Kong. “Singapore is the Westerners" easy entry into Asia, whereas Hong Kong is a lot more full on,” she says. Shanghai also has its challenges, and not all are to do with business - pollution is a well-publicised and growing issue in China"s finance hub.

For Paul Christopher, Managing Partner at Mourant Ozannes in Hong Kong, the decision to choose the city over Singapore or even Shanghai was purely to do with existing business. The firm worked on Glencore"s dual London and Hong Kong listing in 2011 and, as a result, already had a client base in the city.

“For many firms Hong Kong is a Chinese hub, but for us it"s a hub for the whole region,” he says.

For Collas Crill"s Santos, Singapore presents a less crowded space, as well as one focused heavily on private banking - a key strength of the Channel Islands, especially for Asian clients wanting to use the islands to access the UK.

“Hong Kong has always been up there, but Singapore has caught up a lot. We made a definite decision to be somewhere not a lot of other firms were and where there"s a lot of emerging appetite from Indonesia, Malaysia, Vietnam, Thailand, India and Myanmar. Singapore serves all that,” he says.

Building bridges

In terms of the growing reputation of the Channel Islands and their potential to take on the Caribbean for Asian business, most are bullish, and not only because of the increasing presence of Jersey and Guernsey firms in the region.

“The attention of Asian investors is beginning to turn towards the UK and Europe, and those are jurisdictions that Jersey and Guernsey know incredibly well. Those advising Asian investors looking to invest in the UK know the islands and are comfortable with their structures,” says Leese.

“A classic example: I was acting for a south east Asian client who wanted to buy an apartment in London recently, and we put in place the ownership structure through a Guernsey trust. All his London advisers were familiar and comfortable with using it.”

But echoing Appleby"s Woo, Collas Crill"s Santos says commitment is key for firms looking to crack the Asian market. “You need to bring people over who have done some work here, who can lead with clients you already have in the region, because turning up cold is a pretty hard task,” he says.

With both Jersey and Guernsey continuing their push into Asia, it seems pretty certain that the number of Channel Island companies doing business in the region is only set to increase. It"s just a case of deciding where to start.