Dentons is cutting its ties with its China arm citing Chinese cybersecurity and data protection laws.

The move unwinds Dentons’ landmark combination with Dacheng Law Office in 2015 to create the world's largest law firm by headcount and reflects China’s deteriorating relationship with Western economies.

“In response to recent Chinese government mandates on Chinese law firms, including those relating to cybersecurity and data protection, Dentons is modifying its relationship with Beijing Dacheng Law Offices (大成), the Chinese legal partnership that has been a member of the Dentons Group since 2015,” Dentons said in a statement.

“Moving forward, 大成 will operate as a separate, standalone law firm that will serve as Dentons’ preferred law firm for clients with legal needs in China. While our legal relationship is changing, we will continue working together to meet our clients’ needs across China and the 80+ countries where Dentons does business.”

Given that Dacheng Law Office had always operated as a separate firm as a member of Dentons Group’s Swiss verein, the decision to terminate this arrangement, which was first reported by Law.com, underlines the extent to which the geopolitical situation is causing law firms and other businesses to re-evaluate their relationship with China.

According to the Financial Times, other firms are considering similar measures, especially given the broadening of China’s anti-espionage laws in April to cover any “documents, data, materials, or items related to national security and interests”.

The FT reports that a number of raids on global companies in China have caused particular alarm.

In an email to clients seen by the FT, Dentons said it expected “the most notable change you will see is an update to our firm’s logo and branding, which will return to our pre-2015 approach that does not include the Chinese characters and will roll out in the coming weeks".

A multitude of international law firms operate in mainland China, either through representative offices or alliances in free trade zones.

In July, Morgan Lewis & Bockius announced the launch of an office in the booming southern city of Shenzhen while in June HFW said it was strengthening its presence in South China after becoming the first UK-based international law firm to be given permission to open a representative office in the Greater Bay Area.

Those moves reflect the burgeoning trade still taking place between China and the rest of the world.

Last month, Eversheds Sutherland’s international arm and King & Wood Mallesons’ (KWM’s) China business unveiled an exclusive cooperation agreement.

In an interview with GLP, Eversheds Sutherland’s international CEO, Lee Ranson, said given the geopolitical environment, it makes sense “to explore ways to get business done without necessarily committing to mergers or having people on the ground”.

He added: “It is true there is a play around international companies de-risking when it comes to their engagement with China. But it is part of our role to advise clients on how to navigate a complex trading environment. There are challenges around supply chains and how to operate in China, for example around new data regulations being introduced. Our clients need to respond to this and we can now offer them even more sophisticated advice." 

Dentons’ Hong Kong LLP, meanwhile, will remain part of Dentons Group, suggesting a wholesale withdrawal from Hong Kong by the international legal community is not yet on the cards, despite the introduction of the national security law in 2020 and the accompanying suppression of the city's pro democracy movement.