Allen & Overy is positioning itself to take advantage of a boom in China-related advisory services with the expansion of its Shanghai office. Simon Black will move up from Hong Kong to become managing partner, Xiaowei Ye has switched to Shanghai from the Beijing office and two additional associates will also join the office.

Black is an English-qualified lawyer specializing in banking and projects advice for clients in the energy and infrastructure industries. During his seven-year stint in the firm's Hong Kong office he has advised on several key transactions in China, including the recent $4.3 billion Nanhai petrochemical project, the joint venture between CNOOC and Shell, the Chengdu water project and the Shandong independent power project. In the short term he will remain in Hong Kong, jetting up to Shanghai on a regular basis, but will move permanently in March 2004.

Xiaowei Ye, the office's other partner, is a former Shearman & Sterling lawyer whose resume includes some of China's biggest SEC-registered securities offers, such as China Aluminium, PetroChina and China Mobile. The rest of the office will be made up of three Mandarin-speaking foreign-qualified associates and two PRC legal assistants.

"This is just a start," says Brian Harrison, Allen & Overy's Asian head. "As we move forward, we will further bolster our presence in Beijing and further consolidate our presence in this vibrant China market."

The decision to post two heavyweight partners to its Shanghai office signals a new push into China for Allen & Overy. The big English law firms, known rather improbably as the "Magic Circle", were in the past somewhat hesitant in their embrace of China. Certainly it was the American firms that got there first - Coudert Brothers is the proud possessor of licence number 001 and most of the legal community's first China hands, pioneers such as Jerry Cohen, were also American.

Allen & Overy's decision to focus on infrastructure projects and SEC-registered securities offers, the two areas that Black and Ye specialize in, means going head-to-head with the US firms. And while English firms have a fair share of the projects market - partly because transactions are routinely governed by either US or English law - they have failed, so far, to crack the market for US securities advice. Every one of the Chinese privatization mandates has gone to a New York firm: usually Sullivan & Cromwell, Davis Polk, Shearman & Sterling, Skadden Arps or Simpson Thacher.

But big-ticket work is no longer the only area that attracts law firms in China. They are increasingly pursuing a more rounded, long-term strategy: building contacts, knowledge, relationships and track record, while at the same time nurturing young PRC-qualified lawyers to international standards. All of which underlines a view that China will soon be a vast market not only for foreign manufacturers and bankers, but also for lawyers. "It's difficult to imagine an international law firm being successful in the future without being successful in China," says Black.

There is also hope that rule changes will one day allow these firms to plug into the domestic market, which would allow offices in Beijing and Shanghai to offer the full suite of corporate advice, just as they do in Hong Kong. Under Ministry of Justice rules foreign law firms cannot at present give clients' opinions on Chinese law but are allowed to maintain offices in big cities, subject to approvals, and can advise on the structure and international aspects of deals. But relaxation is probably still five years away. Until then, overseas law firms in China will have to continue to sit on their hands.