Douglas Robertson

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2006

Local lawyer heads to Beijing to work on economic reforms

KATHRYN LEGER, Freelance Friday, September 01, 2006

Some might consider the legal practice of Montreal lawyer Douglas C. Robertson with the People's Republic of China as complex as the official list of 2,000 characters one must learn to be considered minimally literate in the Chinese writing system.

Douglas Robertson

Robertson, one of Canada's top legal specialists on China, is heading to Beijing in the coming weeks to work with an Asian Development Bank team helping local government officials draft the country's first securitization law. In 2000, the ADB appointed him as a foreign law expert to work with the Chinese government's economic law reform project to develop the precursor business trust law, enacted the following year.

The latest assignment comes as China continues a radical structural transformation of its economy, loosening up many of the restrictions on ownership and foreign investment through legal and regulatory reforms governing its financial and capital markets.

A week from today, a new regime affecting foreign acquisitions of private and public entities in China will come into force. The new legal provisions are Step 2 of a dual reform that last year saw a major change in foreign exchange controls that makes it easy for Chinese companies to set up foreign structures to give them access to foreign capital markets.

"It is a really complicated, fast-changing environment where to keep up to date requires almost daily attention," says Robertson, who joined Heenan Blaikie LLP last year after 41 years - his entire legal career - at cross-town rival Davies Ward Phillips & Vineberg LLP.

As well as keeping up with changes inside China, Robertson, now chairman of the International Business Law Group at Heenan Blaikie, adds he has "been doing nothing for the last three weeks but dealing in the area of regulatory authority in multi-jurisdictions."

He is also advising Canadian companies setting up shop in China.

"There are a lot of Canadian companies that are going to China to try and establish manufacturing operations, either by a joint venture with a Chinese partner, investing in a Chinese company and bringing proprietary technology to it, or starting a greenfield (building from scratch) operation. And I am working on three now ... one of each. But they are not easy. It takes an awful long time."

Robertson estimates the success rate with such operations is about 50 per cent and the horizon time for completion can vary.

"Fifty per cent, you actually get it done, and of those, my guess is three years," he says. "I know cases that have gone much faster, I know cases that have taken seven years. It is getting faster because of all the changes. It is becoming much easier to do business. The regulatory red tape is almost non-existent now."

Douglas Robertson

Private equity cases, or investing in a company that does not have its shares listed on an exchange, is not quite as hot a commodity as it was a year and a half ago in China, Robertson says, but the process for listing Chinese companies overseas (there are no IPOs, or initial public offerings to raise money in China) is easier.

If one can call easy the existing route of using an offshore company registered in a jurisdiction such as Bermuda to acquire a Chinese operating company before going public on the Nasdaq or Hong Kong public trading exchanges, "a process that has not changed for about 10 years, but was not as transparent as the new legislation (coming into force next week) is going to make it."

Despite all the complexities and inevitable risks, Robertson maintains "the stories can be absolutely fantastic because China is, and the uptick can be absolutely extraordinary."

"I was looking at a company this morning, which I can't name because I have someone that has invested in it. In 2005, it was basically capitalized at 12 cents a share, went public at $10, hit a high last year of $23, and now it is back to $10."

In 1985, Robertson found himself in on what has become the big China boom of the past few years. A client of his had partnered with a Chinese company to make what at that time was the largest foreign investment made by China in a North American company, about $100 million, in a deal involving the purchase of pulp mill operations from a British Columbian government agency.

The client was Consolidated Bathurst (now part of Abitibi-Consolidated Inc.) and the facility was the Celgar mill.

"In those days, nobody had any experience in China," Robertson recalls, pointing to the many changes since then and the new direction for the future.

"China is going to be the pre-eminent economic power in Asia," Robertson says. "It is going to impact the way we live because our manufacturing is going to shift from historic smokestack industries, which they can do much cheaper, into high-value knowledge-based industries, where we compete on a more or less level playing field. There are companies all over North America that have Chinese connections, either in distribution or manufacturing, in research, investment, the whole gamut."

©  The Gazette (Montreal) 2006

Tuesday Jan 25, 2005 globe Heenans paces itself toward Bay Street
The Montreal firm wants to be a top-tier business law firm, but it's in no rush, writes BERTRAND MAROTTE
....Heenans -- which last year recruited former prime minister Jean Chrétien, adding to other marquee names in its employ, including former Quebec premier
....In Montreal, the firm also scored a recent coup by luring Douglas Robertson away from Davies Ward Phillips & Vineberg, where he once headed the firm as managing partner, along with the business he brought from client Power Corp. of Canada.

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