Our China Story

Our firm’s China history can be traced back to 1981, shortly after China introduced its open door policy in 1978 to open China to foreign investment using its new joint venture law as the legal structure.

Our senior partner participated in the first China conference in 1981 with key speakers such as Professor Jerome Cohen from Harvard University and Ren Jianxin, the then head of the Legal Counsel Office of the China Council for the Promotion of International Trade and later the first president of the Supreme People’s Court in Beijing and a member of the Chinese Politburo.

He was also a member of the first Australian legal delegation to China led by the Attorney-General Robert Ellicott in that year. At the Beijing meeting he made a speech on joint venture law and was invited to provide advice on drafting of China’s joint venture law. He was appointed to be an Adviser to the State Council’s Economic Legislation Centre headed by Gu Ming to assist on its joint venture law preparation.

In October 1984 negotiations commenced for the AUD$420 million Channar joint venture between the Chinese Ministry of Metallurgical Industry and Hamersley Iron Pty Ltd. The Ministry established a separate entity known as China Metallurgical Import & Export Corporation (“CMIEC“). The joint venture is an unincorporated or contractual joint venture owned 60% by Hamersley Iron and 40% by CMIEC. Hamersley Iron contributed the mining leases and the Chinese side guaranteed the offtake market in China for the 24 year life of the joint venture.

A letter of entrustment was signed on 17 October 1984 for the appointment of Chambers & Company as the lawyers for CMIEC. The letter was signed by Zeng Junwei, the inaugural chairman of China Global Law Office and Mr Jiao Yushu, president of Anshan Steel Research Institute.

This was China’s first major overseas project and the Chinese made speeches that Mr Chambers was the first foreign lawyer hired by the Chinese government when he was appointed for this joint venture.

In an article in The Australian newspaper on 21 January 2005, Professor Ross Garnaut, a former Australian Ambassador to China, wrote about the history of the Channar joint venture at the time of the death of the former Premier Zhao Ziyang.

“Much of the political support for the project resulted from personal meetings between the Chinese Premier Zhao Ziyang and the Australian Prime Minister Bob Hawke when they shared the vision for deeper integration of the Australian and Chinese iron and steel industries.”

Professor Garnaut reported that “the joint venture between China and Hamersley in a new mine in the Pilbara turned out to be immensely challenging. Chinese officials became aware of the policy obstacles at the Chinese end. New policy on investment abroad, foreign exchange, budget allocation, personnel movements and long term sales contracts had to be developed and approved at the State Council level.”

He added, “The result was a huge expansion of Australian exports to China, increased Chinese confidence in relying on international markets for raw materials and a model that was followed in detail in other industries – notably the natural gas agreements between China and Australia.”

The Channar joint venture has established the “model” joint venture for Chinese investments in the resources industry in Australia. At the time, conflicting views were held as to whether to proceed with a joint venture or to rely on long-term sales contracts. Today the joint venture structure is producing record net margins each year for the joint venturers well in excess of the original capital investment in the joint venture.