Stephenson Harwood has closed its office in Guangzhou as the UK firm reviews its strategy in the world's soon-to-be largest economy.

The London-headquartered outfit, which has made clear its intentions to grow in Asia with bases in Hong Kong, Beijing, Singapore and more recently Seoul, is understood to have shut the base in Guangzhou as it considers local tie up options in the country.

In a statement, CEO of Stephenson Harwood Sharon White declined to specify the firm's future plans except to say it would remain in close contact with the former Guangzhou lawyers, who have set up their own PRC outfit.

"In 1994, Stephenson Harwood became one of the pioneering international law firms to set up in Guangzhou. Since then, the legal landscape in China has changed considerably and we have decided to cease operating in Guangzhou.

"Notwithstanding the cessation of our practice in Guangzhou, we will continue to maintain strong ties with the city. Our former colleagues are in the process of setting up an independent PRC law firm. We expect to maintain close working relationship with this firm, when established."

Stephenson Harwood is among a number of international firms looking at how best to tackle the China; as outbound investment from the country continues to increase and the Chinese.

The market currently prohibits foreign firms from advising on local law, but does allow options for PRC outfits to tie up with Hong Kong firms – which may include the Hong Kong branches of international players – under China and Hong Kong's Closer Economic Partnership Arrangement (CEPA).

Also on the cards is the Shanghai Free Trade Zone, which is also set to allow joint venture arrangements between foreigners and locals.

It has so far sparked the interest of a number of players including Linklaters, Baker & McKenzie, Herbert Smith Freehills and Simmons & Simmons, but full details of the scheme are yet to be announced.