Demystifying China’s Legal Landscape: Perspectives from a Shanghai-based Ecuadorian Lawyer Luis Borja

In this episode, we sit down with Luis Borja, an Ecuadorian attorney-at-law with extensive experience in corporate, commercial, and information technology regulations, as well as China policies. He is currently a Partner at H&W Law Firms Group in Shanghai and an Associate at DeltaLegal Law Firm in Quito.

Luis has a strong background in Hispanic-Chinese comparative law and is passionate about integrating new technologies into the legal practice. His expertise extends to various areas of law, including trade, labor, business, contracts, investment, intellectual property, and more.

In this episode, we cover:

• Regulatory differences within Greater China
• Legal concerns for businesses entering the Chinese market
• Cultural understanding, auditing, and due diligence in cross-border business
• The role of technology in the legal sector

Tune in to this informative episode as Luis shares his insights on cross-border experiences and the evolving role of technology in the legal sector. Click to follow and subscribe for more engaging content. See you soon!

Links:

Bluente's Website: https://www.bluente.com/

Luis’ LinkedIn: https://www.linkedin.com/in/luisfelipeborja/

Our Socials: @bluente.official (Instagram and Tik Tok)

Transcript

Daphne (Host) | 00:00:06 to 00:00:45

Welcome to another episode of Business Beyond Borders. Today we have with us Luis Borja, who is an Ecuadorian attorney at law with extensive experience in corporate, commercial and information technology regulations as well as China policies. He is currently a partner at H&W Law Firms Group in Shanghai and also an associate at Delta Legal law firm in Quito. Luis has a strong background in Hispanic Chinese comparative law and is passionate about integrating new technologies into the legal practice. His expertise extends to various areas of law, including trade, labor, contracts, investments, intellectual property, and more.

I'm really excited to learn more about Luis, the many languages that he speaks, as well as his role currently based in China. Welcome, Luis to today's episode. 

Luis (Guest) | 00:00:45 to 00:01:01

Hello, Daphne. Thank you. Thank you very much for the invitation and greetings to all the watchers. 

Daphne (Host) | 00:01:03 to 00:01:20

Yeah. Maybe we'll kick start by telling us a little bit more about the work that you do. How does your day to day look like? How do you balance your roles across being a partner in Shanghai at H&W Law Firms Group, as well as your role at Delta Legal in Quito? How do these roles complement each other? Tell us more. 

Luis (Guest) | 00:01:20 to 00:01:52

Well, my day to day work basically starts with my work at H&W Law Firm Group. So usually I arrive pretty early at the office to take care of, as an international lawyer, you need to be connected at all times, anytime around the day. So basically responding clients that are in their nighttime while I am in my daytime, that is something that I need to start doing every single day.

So basically all the mornings are for meetings with people in other side of the world and then responding to emails during the day. Well, basically after all the meetings that I have with the clients or partners in the morning, the afternoon are basically to get all this information together and to come up for solutions for all these clients and their needs in China and then connecting at night again to offer these solutions to the clients. So it's very busy.

Daphne (Host) | 00:01:52 to 00:02:28

Busy is always good. But maybe remind us again what's the time zone difference between Kuto, Ecuador as well as in China? 

Luis (Guest) | 00:02:30 to 00:02:45

It's 13 hours. Yes. 

Daphne (Host) | 00:02:45 to 00:03:14

Okay, nice. So you're kind of busy all day. 

Luis (Guest) | 00:03:14 to 00:03:43

Yes. But very interesting things happening between Latin America and China. So this is what is going on. And of course, the work that I do, as you mentioned, things related to investment contracts, labor law, all these things, they are very different through different jurisdictions. So my job is to understand not only the laws, but also understand the mind and the culture in these. 

Daphne (Host) | 00:03:45 to 00:04:00

Correct, correct. But maybe we can start from at the beginning where you had a master's of law in Peking University. You took on a degree there and then now you are based out of Shanghai. What piqued your interest in the China region and also in Chinese policies in general?

Luis (Guest) | 00:04:00 to 00:04:55

Well, as a fresh graduate in Quito, so I just ended my law degree in Quito, I was looking for master's degree, actually. This is an interesting story. I was actually looking for a master's degree in environmental law. Okay. And I said, So what is the country that has the most environmental problems to learn from? And that was the original idea. So I actually applied for master's degree in environmental law, and I got a scholarship from the Chinese government to study Chinese first and then masters. And then while I arrived in Beijing in 2013 and while I was studying Chinese, I kind of realized that I also lacked a very deep understanding on Chinese laws in general. So I decided to pursue these masters that cover constitutional law, administrative law, civil law, which for me, it has proven to be much more useful in terms of understanding Chinese legal system in order to serve also my clients better and well after ending my master's degree in Beijing, I got approached by a company in Shenzhen that they were developing a technology-based platform for legal services, which for me was something completely new. 

I had never seen that kind of mix between technology and legal services before. So I decided to take the role as the international manager in this company. And this is how it started. This is how I got more in deep into how these new technologies could use us as legal practitioners internationally.

So artificial intelligence, blockchain technologies, all these emerging technologies that at some point I knew that they would have some influence in our work as legal practitioners. 

Daphne (Host) | 00:04:55 to 00:05:33

Yes. Interesting. We'll touch a little bit more about the technology aspect in a bit, but just wanted to dive deeper into your experience in the Greater China region. What are some of the areas that you have noticed in terms of regulatory differences across the various jurisdictions within Greater China itself in your day to day work, and how do you address these differences?

Luis (Guest) | 00:05:33 to 00:06:10

Well, the differences I have learned during my practice that China, even though it's only one country, actually it presents challenges depending on the province, depending on city, and the district. When I talk to a client, when they ask me, so for example, they tell me, okay, so how can I establish a company in China? I respond, well, you have to be more specific on what you do, because it depends on what you're doing, what you're trying to do in China that you will decide, okay, this is the perfect place for me. And then this specific place will have special regulations or certain incentives, even incentive for the businesses, right? So my job is to understand the client needs first, and then we will look into the best city, the best jurisdiction that works for the best interest of the client. So that has been a challenge in terms of not only establishing companies, also in terms of labor regulations, legalization of documents that is usually like a thing that is being requested a lot process legalization of documents which because of the size of China, there's no centralized system for legalizing.

Luis (Guest) | 00:06:12 to 00:07:43

We would hope to move our people to different parts of China in order to accomplish this. But those are the challenges. I mean, those are the challenges and also the opportunities that China gives us.

Daphne (Host) | 00:07:44 to 00:07:56

And how do you personally spend the time to understand these different nuances across the different cities?

Luis (Guest) | 00:07:58 to 00:08:05

Based on the client's requirements. So, for me, I do get updated from time to time on regulations. So every single day, okay, going back to the daily things that I have to do, I also need to be updated on the regulations. So I always checking what kind of regulations, what kind of laws are being discussed in order to have something new or new knowledge for the client that is coming for a request on certain topics from time to time. But the real challenge comes when the client comes with the actual case.

Luis (Guest) | 00:08:08 to 00:08:45

So I would need to update myself. Okay, so let's say this is how we recover a debt in a certain city. So what are the regulations now? What are the guarantees that I can give to the client, what things are working now, what things are not working in practice? So those are the challenges that come from a very diverse China in terms of looking for solutions for the clients. It's very diverse. 

Daphne (Host) | 00:08:45 to 00:09:13

And also earlier you mentioned there are a lot of recent updates in terms of or a lot of rapid developments in terms of the areas where the LatAm region is coordinating or kind of working together with the greater China region. And also we understand that you're an honorary advisor to the Mexican Chamber of Commerce in China. Maybe we can start off with what are some of the common legal issues and concerns that let them businesses face when conducting cross border operations in China and then maybe in a short while we can move on to you know what are some of the more recent developments and trends that you have seen and heard?

Luis (Guest) | 00:09:13 to 00:09:55

Well, one very common request between the two regions, and let's take Mexico as an example. As you said, the Mexican Chamber of Commerce is the biggest Latin American chamber here in China. So it actually covers all countries in Latin America. But let's focus on Mexico. What is the usual request that is happening right now? What are the inquiries that are happening now? As we all know, they will come because of the pandemic. So because of the pandemic, a lot of retailers, a lot of companies, they started to move their companies out of China. The supply chain was disrupted and they are trying to fix that. They're trying to fix that because there is some doubts on how China will act in terms of emergency.

Luis (Guest) | 00:09:56 to 00:10:18

So Mexico right now is pushing into being that next powerhouse for manufacturing. And that is happening at the moment. A lot, a lot of companies, they are not only going to Southeast Asia, but they're also looking into Mexico for their production. I mean, the other day I was also listening to some podcasts of a major in a specific city in Mexico and he said, yeah, we need to actually copy the China system on which we offer incentives. We create special zones for companies to welcome. 

Luis (Guest) | 00:10:18 to 00:10:45

And of course, this  cannot be more attractive than to have access to the North American market. 

Luis (Guest) | 00:10:45 to 00:11:21

That's right.

Luis (Guest) | 00:11:22 to 00:11:45

Between the North American treaty between Mexico, Canada and United States. You can take advantage of this and this is something that is happening right now. And yes, it's inevitable, I think. 

Daphne (Host) | 00:11:45 to 00:12:20

Okay, and how about in terms of common legal issues or concerns that the LatAm businesses face when they are entering into the Chinese market? What are some of these more common ones? I think earlier you mentioned some labor issues, especially where to set up as well as labor disputes potentially. But beyond that, what other legal concerns or issues you have observed over the years? 

Luis (Guest) | 00:12:22 to 00:13:15

Usually they are related to contracts, contracts, supply of goods. At the moment, of course, there is a lot of disputes regarding companies that had to close their operations during pandemic and deliver the goods to their buyers in Latin America. 

So trying to go into negotiations, trying to see how these contracts were actually drafted, because what I have seen is that most of the time these contracts are drafted by people that are lawyers that are in Latin America or they are just contracts that the factory just send them and they just decided to sign it. But that is not how it works. 

I mean, there must be a mind that understands Chinese law and understands in my case, Ecuadorian law to actually reach a consensus and to see and to guarantee the client that they are going to get their money back or their goods. So that is very big problem that we're facing at the moment.

Luis (Guest) | 00:13:15 to 00:14:02

But also I think there is a lack of knowledge on how Latin Americans do business in China, but there's also a lot of lack of knowledge from Chinese companies on how they do business in Latin America. I think it goes both ways. I mean we can see the issues that Latin Americans have when they want to enter the Chinese market in terms of where are they going to focus their market, what kind of shock in culture, in terms of business, what kind of shocking culture they're going to have in doing businesses, but also for Chinese when they go to Latin America. And of course there needs to be a guide to tell them, okay, these regulations are very serious in our countries.

Luis (Guest) | 00:14:02 to 00:14:31

You need to obey them, you need to follow the regulations. But there is no such training for these companies in the market. So I think there's a lack of understanding of both sides and that needs to be fixed. I think it's on a long term by the practice, but yes, this is something that is being talked about and tried to be regulated by the as you mentioned, the free trade agreements, right? Yes, the free trade regions.

Daphne (Host) | 00:14:31 to 00:15:08

Yes. You mentioned a little bit about culture shocks. What's maybe one striking example that you remember or have observed in companies that you had worked with or maybe just a general observation in general.

Luis (Guest) | 00:15:08 to 00:15:36

A general observation is that probably you will face companies that they will offer you the world, they will offer you everything. And there needs to be an auditing, there needs to be a team, an investigation to see what is actually happening behind this curtain. Right, yes. During the meetings between Chinese companies, Latin American companies, the companies are actually quite big and they will show you their premises. But what is happening behind these premises? Maybe there are companies that have a very low capital that they cannot cover if something gets lost during the contract, maybe lawsuits that the company has behind. But of course they're not going to tell the client right away.

Luis (Guest) | 00:15:36 to 00:16:11

So this work of auditing, of due diligence, I would say is necessary. But again, this also happens with Latin American countries. And in Latin American countries, probably this misplacement of information about companies would be directed into political instability that we have. So political instability, it also creates problems in terms of security, crime, frauds.

Luis (Guest) | 00:16:12 to 00:16:42

So this also needs to be companies need to do also due diligence against Latin American companies because it's an unstable region and it has been for many years. And my job as an attorney is to seek for the best deals as possible and they actually do for a very long time. 

Daphne (Host) | 00:16:47 to 00:17:04

Yeah. And I believe your in-depth understanding of the laws of both regions can definitely help to facilitate this. We also understand that you currently speak three different languages, English, Chinese, as well as Spanish. And given your strength in various languages, how did it help you to facilitate communication as well as understanding cross-border legal matters?

Luis (Guest) | 00:17:07 to 00:18:14

Chinese language. For example, when I have to review some documentations, there would be contracts that they would say in one of the clauses that they would say that the Chinese version is actually it would be the language that is assigned to the contract, even though that the language might be in two languages, they would say is going to follow Chinese language as the main language for controversy. And I have found some discrepancies between the translations in English, in Chinese and Spanish and Chinese, which they don't actually say the same in both languages. And that could create some discrepancies and some problems if you want to enforce this contract into an arbitration or mediation courts, because it's very easy to take a clause that is in English and then translate it to Chinese with any online platforms.

Luis (Guest) | 00:18:14 to 00:18:59

But it's not that simple. You need a legal professional to actually check the exact terminology that is used for legal terms because you change one word, it's going to change the situation completely for the client. 

Daphne (Host) | 00:19:00 to 00:19:37

Yes, very interesting. And I think last question, touching upon one of the areas that you're really passionate about, which is the technology side of things that you had also alluded to in your introduction. Would you be able to share some insights and experiences with us in terms of how you have seen the integration of new technologies such as artificial intelligence, AI blockchain in enhancing the legal practice and administration and how that can help to facilitate and grow the legal sector in the next couple of years?

Luis (Guest) | 00:19:37 to 00:20:23

In terms of artificial intelligence, I mean, we do have very recent developments and very recent usage that we see nowadays. Everybody's talking about ChatGPT and they're all talking about creating a platform that is similar to ChatGPT. Well, ChatGPT is not something new. It has been a technology that has been developing for at least seven years, but nobody gets a name. I mean, the company that actually created this system, of course they became famous as the name and ChatGPT, but there's also more than 30 other platforms that do this. They use artificial intelligence to generate these more comprehensive responses right. Or comprehensive requirements that we have. So there are quite some news there were quite some news some months ago that lawyers somewhere in the US decided to use ChatGPT to drive a subpoena. So the judge kind of found out about this and of course he was fined because of using and there were some elements and some mistakes into this piece of paper that were made by the artificial intelligence. But that's the thing.

Luis (Guest) | 00:20:23 to 00:21:03

In terms of relying I mean, as lawyers, we shouldn't be relying on artificial intelligence to draft these papers for us, these subpoenas for us or these statements for us. It could be a very useful tool for us. For example, to summarize a court decision we have decision in order to summarize it, not for the sake of us, just for reading the court decision. We still have to read the whole thing. Yes, but if we want to give a short version to a client and they say, okay, so this is 20 pages, of course they are not going to read 20 pages.

Luis (Guest) | 00:21:04 to 00:21:23

Please ChatGPT or whatever interface, please help me to summarize this, to tell the client. But us, as lawyers, we use this as a tool. It's not a replacement to our work. And that is something people need to understand. I mean, these technologies are there to help us to do our work better, not to replace us.

Luis (Guest) | 00:21:23 to 00:22:10

It cannot be taking a replacement because it can create a lot of risks. And if somebody gets to jail, you're not going to blame a computer for that. So that is my thoughts. But in terms of using, for example, blockchain technology, artificial intelligence for management inside a law firm, for example, in terms of intellectual property, that could be a very interesting approach. Let's say that in terms of intellectual property, we do have currently a system that you would have to register your patents, your trademarks, in a specific region and according to different international treaties, it can be recognized in some countries, but not all of them.

Luis (Guest) | 00:22:10 to 00:22:53

So what if we had a system like a blockchain system that cannot be changed, that can be recognized by countries around the world, and you have your trademark for an international recognition. And this is not something new. It has already been tried and developed by some companies. The idea and also the international organizations WIPO UN, they have seen the power of these new technologies in order to make access in terms of intellectual property easier for the general public. So technology is a tool, it's not a replacement. And yes, that's what I have to say about that. 

Daphne (Host) | 00:22:55 to 00:23:17

Nice. I'm really excited to see how technology can help to transform the industry going ahead. Thank you for sharing with us your insights regarding the cross border experiences across the LATAM region as well as China region. I've learned a lot myself and really excited to see how this will continue to develop in the next few years.

Luis (Guest) | 00:23:17 to 00:23:28

 No problem. Thank you. Thank you very much for the invitation. 

Daphne (Host) | 00:23:28 to 00:23:32

Thank you for listening to Business Beyond Borders. If you have any feedback or thoughts, do write into us at support@bluente.com. Click to follow to tune into the next episode. See you again soon!