State-Owned vs. Private: Why Chinese Clients Aren’t One Market—And What That Means for Pricing
“From decades of working with Chinese clients, they generally want to know who you are first before what you can do. But I tend to group them into two. The first category are the ones who are SOEs, the ones with some state support. They have a slightly different approach than those who are not state support.”
David Ofosu-Dorte‘s observation challenges the monolithic “Chinese client” category that international law firms often default to in their market strategies. As Executive Chairman of AB & David Law, one of West Africa’s premier firms, he brings decades of experience working with both Chinese state-owned enterprises and private sector companies investing across Africa—from China Development Bank to major mining and infrastructure firms.
What he’s learned matters: Chinese clients don’t form a single market with uniform characteristics. State-owned enterprises and private companies evaluate counsel differently, negotiate fees differently, and respond to relationship-building differently. Firms that treat all Chinese clients the same fail to optimize their approaches for either category—and often lose business to competitors who understand these distinctions.
The October 31 LexChina roundtable provided Ofosu-Dorte a platform to share insights from frontline China-Africa transactions. His perspective bridges three distinct legal cultures—Ghanaian, broader African, and Chinese—offering unique visibility into how relationship-driven business cultures operate when both parties come from non-Western traditions.
The SOE Cost Pressure Reality
The first critical distinction Ofosu-Dorte identified involves pricing dynamics: “In respect of the state-owned entities, it appears to me there’s a lot of cost pressure on them in determining hiring. So notwithstanding the fact that you have the trust and you have the relationship, they tend to look at how you price.”
This observation challenges the comfortable assumption that guanxi—relationship—trumps all other considerations for Chinese clients. It does and it doesn’t. With state-owned enterprises, Ofosu-Dorte explains, relationship building gets you to the negotiating table. But price competitiveness determines whether you get the engagement.
The distinction matters enormously for business development strategy and resource allocation. If relationship were sufficient, firms could invest heavily in cultivation, accept premium pricing, and rely on trust to close deals. But SOE cost pressure means firms need both strong relationships and competitive fee structures—a more demanding combination than private sector Chinese clients typically require.
Why do SOEs face different cost constraints? Ofosu-Dorte didn’t elaborate extensively, but China watchers understand the dynamics: State-owned enterprises operate under government scrutiny that private companies escape. Their legal spending faces internal audit review. Department heads who engage expensive foreign counsel without clear justification face questions about their decision-making. The political risk of appearing wasteful with state resources creates pressure to demonstrate cost discipline.
This means SOE legal departments cannot simply hire the firm with the best relationship when that firm’s fees significantly exceed alternatives. They need to justify their selections through competitive pricing, demonstrated value, and clear rationale for foreign counsel engagement.
For international firms, the practical implication: targeting SOE work requires competitive rate structures, not just relationship cultivation. The relationship provides access and credibility, but economics close the deal.
Private Sector: Different Evaluation Criteria
Ofosu-Dorte contrasted SOE cost pressure with private Chinese companies’ approaches, though he didn’t detail private sector distinctions as extensively. The implication: private Chinese companies have more flexibility in counsel selection, face less scrutiny about legal spending, and can weight relationship considerations more heavily relative to price.
This doesn’t mean private companies ignore costs—Ofosu-Dorte emphasized that “both of them look to reputation as quite important to them.” But the relative weight given to different selection criteria varies significantly between state-owned and private clients.
The segmentation suggests international firms should develop differentiated strategies:
For SOE pursuit: Lead with competitive pricing structures. Emphasize value demonstration. Provide detailed scope breakdowns justifying foreign counsel costs. Build relationships but recognize price will ultimately determine selection. Be prepared for extensive fee negotiations and requests for discounts.
For private sector pursuit: Lead with relationship building. Emphasize unique capabilities and specific transaction experience. Price competitively but recognize relationship quality may offset moderate premium pricing. Focus on long-term partnership positioning rather than individual matter economics.
Reputation Verification: Beyond Directory Rankings
Both SOEs and private companies, Ofosu-Dorte explained, evaluate reputation differently than Western clients: “Unlike many Western companies who may want to rely on the trust based on the fact that maybe you are a ranked law firm, or you are in some particular directory, Chinese clients tend not to look at that as such. Their reputation is important, but then they move to building relationship and trying to get references as to what you have actually done before, not just the tier you are ranked.”
This distinction affects how firms should present themselves. Western clients often use Chambers rankings as decision shortcuts—if Band 1, due diligence is largely complete. Chinese clients—both SOE and private—treat rankings as interesting but ultimately unpersuasive without verification through their own networks.
Ofosu-Dorte described the verification process: “The Chinese client must first approach you. And to approach you, they will either have heard of you from somewhere or read about you in a directory or maybe heard of you from LexChina. But you have to go beyond just that referral. They come to you based on your reputation. And they now begin to establish how do I trust this entity and how do I confirm the reputation.”
The verification involves extensive reference checking through Chinese clients’ own networks, multiple engagements before hiring decisions, and evaluation of specific transaction experience rather than general practice area claims. As Ofosu-Dorte emphasized: “They will do quite a number of engagements before they end up agreeing to even hire you.”
“Quite a number of engagements”—this timeline confounds Western firms expecting credentials to accelerate sales cycles. Chinese clients, whether SOE or private, conduct prolonged vetting that credentials cannot shortcut.
The Regulatory Relationship Factor
Ofosu-Dorte identified another critical selection factor that applies to both SOE and private Chinese clients: “For both state-owned and normal private sector Chinese clients, your contacts and who you know is quite important to them because they tend to be very concerned about the nuances of laws in other countries and your ability to explain the law and also be able to know officials who are in charge of the law tends to be factors when they are building relationships with law firms.”
This reveals something Western firms often miss: Chinese clients—especially those investing in unfamiliar foreign jurisdictions—aren’t just buying legal analysis. They’re buying access to regulatory officials, comfort with enforcement authorities, and the ability to navigate government relationships that may prove decisive if matters go wrong.
For AB & David Law operating across West Africa, this means Chinese clients value Ofosu-Dorte‘s personal relationships with Ghanaian regulators, his familiarity with regional government officials, and his ability to facilitate introductions when Chinese investors need government engagement.
Can you pick up the phone and get answers from the relevant ministry? Do local regulators know and respect you? Will government officials take meetings based on your introduction? These capabilities matter more to Chinese clients—particularly SOEs navigating politically sensitive investments—than Chambers rankings or legal directory accolades.
The practical implication: Firms marketing to Chinese clients should emphasize regulatory relationships and government access alongside technical capabilities. For SOEs especially, demonstrating connections to local regulatory authorities reduces political risk and eases internal approval processes.
Fee Structures That Work for Each Segment
Ofosu-Dorte shared specific fee structure approaches that work with Chinese clients, with particular relevance to the SOE-private distinction:
“Two other types of fees that Chinese clients I’ve worked with tend to like: We do have what normally operates as a retainer arrangement. In a retainer arrangement, a typical retainer will be charging you a certain amount of money and then bill you hourly or different types of arrangements over the period.”
But he identified a structure Chinese clients—particularly cost-conscious SOEs—prefer: “For a couple of major Chinese corporates I’ve worked with, they come looking for a lump sum under which they group a number of tasks so you don’t charge extra. It’s a difficult agreement to make, but somehow if you manage to structure it well and learn how to exclude things that you cannot necessarily predict, they tend to like it because I think it’s a question of being able to predict the fee.”
The lump sum preference connects to SOE cost pressure. When SOE legal departments must justify foreign counsel spending internally and to auditors, fixed lump sums provide certainty that open-ended hourly billing cannot. They can budget accurately, avoid bill shock, and demonstrate cost control to superiors.
The challenge Ofosu-Dorte identified: “It’s a difficult agreement to make.” Comprehensive legal matters inevitably produce unexpected issues. Offering lump sums requires carefully defining scope and excluding unpredictable elements while still providing sufficient certainty to satisfy Chinese clients’ need for cost predictability.
His experience reveals the negotiation complexity: “You must always be sure that the success is well defined.” Ofosu-Dorte learned this through hard experience: “We had one occasion where we thought we had achieved, and the Chinese client thought we had not achieved. And we argued over it for a period. We ended up agreeing on a pro rata of the fee. But that taught us a lot of things.”
The lesson shaped subsequent practice: “What exactly do you want to achieve? And how do we measure if we have achieved it? We write it down and are very clear on what has to be achieved.”
For SOEs especially, this clarity matters because internal approval processes require demonstrable success criteria. Vague success definitions create ambiguity that SOE legal departments cannot defend to auditors and supervisors.
The Demanding Client Question
When asked whether Chinese clients are more demanding than Western clients, Ofosu-Dorte provided nuanced response that relates to the SOE-private distinction:
“Initially, I faced a lot of challenges with that because they ask the same question several times, and they come back and come back before they agree on fee. So you can easily get impatient if you don’t have experience how to work with them.”
The repeated questioning likely reflects SOE internal approval dynamics—legal departments must satisfy multiple stakeholders, navigate internal bureaucracy, and build consensus across departments. This creates iterative engagement that tests Western lawyers’ patience.
But Ofosu-Dorte reframed “demanding” as thoroughness: “I think they are demanding in the sense that they want to be sure that what they want to achieve can be achieved and that they are not paying you for something that they cannot achieve.”
For SOEs, this thoroughness likely reflects accountability concerns. The legal department head who engages expensive foreign counsel for matters that fail faces career consequences. Better to ask questions repeatedly until confident of success than to proceed with uncertainty and face internal criticism if results disappoint.
Ofosu-Dorte‘s advice: “Agree with the Chinese client exactly what they are looking for and agree on how what they are looking for can be achieved. Once they are certain about that, then it’s easy to come to the fees.”
The sequencing matters—outcome clarity before price discussion. “What we are used to is simply setting out our fees and expecting the client to agree,” Ofosu-Dorte noted. Chinese clients—especially SOEs navigating internal approval processes—reverse that sequence. They need outcome certainty before discussing costs.
“Yes, they are more demanding, but once they understand clearly that you will achieve the result, they tend to agree on the fee,” Ofosu-Dorte concluded.
The Invisible Decision Maker Challenge
Both SOE and private Chinese clients present the invisible decision maker challenge, though Ofosu-Dorte didn’t distinguish whether one category exhibits this more than the other: “The question of the invisible decision maker, I’ve experienced it a number of times working with Chinese clients because the person you are interacting with may not necessarily be the one making the decision.”
The dynamic: lawyers invest weeks communicating with one contact, only to discover in crucial moments that an entirely different person holds veto power. “I have found that the more you increase the engagement, the more likely the person you are interacting with is ready to bring the real decision maker on board. And I’ve had several occasions where suddenly somebody pops up and he’s the one who is actually making the decisions.”
For SOEs, invisible decision makers may reflect organizational hierarchy where final approvals require senior executives or board-level sign-off. For private companies, they may reflect family dynamics or personal trust networks where formal organizational structures don’t reveal actual decision authority.
Ofosu-Dorte‘s solution—sustained engagement that eventually surfaces real decision makers—works for both categories but may require different timelines and patience levels depending on organizational complexity.
Collaboration Without Formal Referral Fees
Ofosu-Dorte described collaborative relationships with Chinese law firms that don’t involve formal referral fee arrangements: “We have not had occasion to have anybody ask us for referral fee.”
He distinguished between Western firms subcontracting African work (no referral fees) and direct Chinese client relationships: “There are many direct Chinese clients, I mean, the likes of CDB, China Exim, et cetera, who come directly to us, and for them, there is no issue about any referral fee. What you have to do is to work with the corporate legal team.”
But he also described Chinese law firms seeking collaboration: “Then you have Chinese law firms who like collaboration. Of them, I have seen those who want to sign an agreement that every matter which is a Chinese matter, you can work with them on that. One of them even wanted to put their plaque in our office.”
The challenge: exclusivity. “If I sign with one Chinese law firm, then would other Chinese law firms refer matters to me?”
Ofosu-Dorte‘s solution leverages reciprocal value creation: “What I simply do is I take advantage of Chinese culture. It seems to me Chinese are very much deeply rooted in collaboration and networking. So for example, if I know your client and I can tell you there is a new policy happening in the jurisdiction which will affect your client, and I tell the Chinese lawyer, they tend to feel very happy about it because they look good to their clients. And they refer work to me without asking for any referral.”
Intelligence sharing, regulatory updates, relationship facilitation—these create value for Chinese law firms that generates reciprocal referrals without formal fee arrangements. This model likely works similarly for both SOE-focused and private sector-focused Chinese firms, though the types of intelligence most valuable may differ.
The Growth Imperative Across Both Segments
Ofosu-Dorte closed with strategic perspective on Chinese client opportunity: “One is the Chinese multinational corporations are growing and that’s a significant source of work and we must recognize it, especially in Africa.”
This growth includes both SOEs pursuing infrastructure and resource projects and private companies seeking commercial opportunities. The distinction matters for targeting, but the overall trend—Chinese companies expanding internationally and requiring cross-border legal guidance—creates opportunity across both segments for firms positioned appropriately.
“Culture is an important part, and they believe in collaboration and trust, and we cannot command trust. We just have to gain it by being consistent in our actions,” Ofosu-Dorte emphasized.
For international firms, Ofosu-Dorte‘s insights provide actionable segmentation strategy:
For SOE pursuit: Recognize cost pressure is real. Structure competitive pricing. Provide detailed value demonstration. Build relationships but know economics close deals. Emphasize regulatory connections that reduce political risk. Accept thorough, iterative evaluation processes as SOE reality rather than unnecessary demanding behavior.
For private sector pursuit: Recognize more flexibility exists in counsel selection. Emphasize relationship quality alongside capabilities. Price competitively but understand relationship may offset moderate premiums. Focus on long-term partnership positioning. Navigate family and personal networks to identify true decision makers.
For both segments: Verify reputation through reference networks. Demonstrate specific transaction experience. Build regulatory relationships. Structure fees providing certainty. Accept extended relationship-building timelines. Recognize Chinese clients—whether state or private—evaluate counsel fundamentally differently than Western clients do.
The firms that succeed with Chinese clients will be those that recognize “Chinese market” isn’t monolithic—it’s at minimum two distinct segments requiring adapted approaches, different pricing strategies, and nuanced understanding of what drives selection decisions in each category.
David Ofosu-Dorte is Executive Chairman of AB & David Law, one of West Africa’s premier law firms with offices across Ghana and the region. With decades of experience in cross-border transactions involving Chinese entities, he has developed deep expertise in China-Africa legal relations, working with major Chinese state-owned enterprises including China Development Bank and China Exim Bank, as well as private sector Chinese companies investing across African markets in mining, infrastructure, energy, and technology sectors. He is currently working with LexChina to establish the first Pan-African law firm representative office in China. As a contributor to LexChina Forum, Ofosu-Dorte provides invaluable insights into how the distinction between state-owned and private Chinese clients affects pricing, relationship building, and long-term collaboration strategies for international law firms.