Slaughters, Davis Polk among contenders for Fortune 500 panel

China Resources is set to appoint its first-ever roster of international law firms in a rare example of a major Chinese business adopting a formal panel approach.

The state-owned conglomerate, which posted total turnover of HK$404.6bn (£33.8bn) in 2012, invited law firms to tender for places on its list of preferred international advisers at the end of last year, and is expected to announce the results in the next two months.

The move follows the Hong Kong-headquarted company's establishment of a domestic panel for PRC advice last year, which saw Beijing's Anjie Law Firm – a 12-partner spinoff from domestic outfits Zhong Lun, Grandall and Mingtai – among those appointed.

Western-style formal panel structures have to date been largely unheard of among Chinese companies, most of which typically appoint firms on an individual project or transaction basis.

"This is the first time we are doing this, so it may not be perfect – we are still trying it out," said China Resources deputy GC Anthony Poon. He added that the firm was keen to adopt a panel in a bid to ensure it receives top-quality legal advice on all of its transactions.

"We want to be able to control the quality of legal advice. At the headquarter level, we will now know the firms and have gone through their credentials, so at least we will have a basic understanding of their technicalities and their qualities."

The international panel will be divided into 10-15 areas of law with approximately five to 10 firms appointed to advise on each. Areas such as banking and M&A are likely to require a higher number of firms than offshore litigation, with the company prioritising expertise and existing relationships ahead of cost.

Initial appointments will last two years and will include a mix of international, offshore and Hong Kong firms. Meanwhile, the PRC panel is expected to be reviewed by the end of next year.

Among those vying for a place on the panel are magic circle firm Slaughter and May, US outfits Davis Polk & Wardwell and Reed Smith Richards Butler, as well as offshore firm Appleby. Others to have advised the company or one of its subsidiaries in the past include Clifford Chance, King & Wood Mallesons and Morrison & Foerster.

"Chinese companies are becoming more professional in using legal services. Previously they have either used their in-house counsel or gone to law firms they have already used either because of personal or business relationships," commented Hogan Lovells Beijing partner Rae Yan.

"With the growth of the local law firms and more international firms coming into China, things are changing. Companies are no longer just deciding things based on pricing – they [will take] a broader view and consider more sophisticated solutions."

Another Hong Kong-based partner added: "This is very encouraging in the sense that they are really trying to conduct themselves in a manner comparable with a multinational.

"Increasingly [companies] care about quality. To me it points to the future evolution [of Chinese businesses]. It seems to be the onset of a trend and I wouldn't be surprised if that trend continues."

China Resources, which ranked 233rd in last year's Fortune 500, comprises a range of subsidiaries operating in sectors including retail, food and drink, energy, real estate, pharmaceuticals and finance.