The legal services arm of Big Four accountancy KPMG has expanded into China, opening an affiliated firm in Shanghai to make the most of the ‘massive’ Chinese market.

The firm – which has a proposed English name of Shanghai SF Lawyers – consists of 13 legal professionals and aims to almost double in size in the next year. It advises on mergers and acquisitions, infrastructure, employment, regulatory compliance, and technology, but not on litigation or real estate.

Lachlan Wolfers, head of legal at KPMG China, cited the country’s ‘massive market’ as a reason for expansion. ‘Given the scale of the market and the scale of our operations, it is more a question of why we didn’t do it sooner… It’s something that has been on our radar for several years.’ Client demand was also a factor, he said.

Under current Chinese rules, only lawyers who qualify in China are entitled to offer formal legal opinion, which inhibits the presence of international firms in the country. While Shanghai SF Lawyers is affiliated with KPMG and is part of KPMG’s global legal services network, it is a domestic practice run by Chinese lawyers.

Wolfers said: ‘Domestic Chinese law firms have been growing at a large rate… but they don’t have much of an international network. They operate more closely to how barristers operate. This was an opportunity to set up a domestic Chinese law firm – so we can provide domestic Chinese legal advice – and to leverage off KPMG’s client base.’

On the challenges of establishing a practice in China, Wolfers said: ‘In China there are two levels of law making: formal law and, in addition, some form of implementation rules or local process. [The latter] require you to have significant on the ground presence and experience in working with local governmental authority.’

At the start of this year, KPMG opened an independent law firm in Hong Kong to drive expansion in the Asia Pacific region.