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24 Mar 2021
DaHui Lawyers has recently represented Sequoia CBC Cross-Border Digital Industry Fund (“Sequoia CBC”) in establishing a strategic joint venture with GitLab Inc., a world-renowned Silicon Valley technology company, resulting in the formal launch of their joint venture on 18 March 2021. As a global leader in DevOps which provides a top open-source software development and collaborative project management platform, GitLab’s market entry in China will be fueled by Sequoia CBC’s onshore investment of hundreds of millions of RMB, along with other local resources, which will enable their joint venture, with the new Chinese branding “Jihu” (“极狐”), to more deeply penetrate China’s massive coding community and rapidly grow to become a local “go to” brand within China’s high-tech industry. DaHui’s unique expertise and background in the proposed JV’s structure allowed unparalleled efficiency in cross-border matters of this level of complexity: moving swiftly from negotiations of definitive agreements to closing in less than three months.
In particular, the Jihu joint venture represents another successful implementation of the so-called “Sino-foreign equity joint venture v3.0” or “JV3.0” model, specifically designed to enhance the success rates of US-China joint ventures as well as the US tech companies’ entry and survival in China’s emerging but challenging market. This new JV3.0 model contrasts with the historical joint venture or market entry models deployed by many major US or other foreign Internet companies in China, including the traditional “JV1.0” model (represented by Google and Amazon in the 2000s) or “JV2.0” model (represented by LinkedIn and Uber in the 2010s). In response to common historical problems that such previous China joint ventures suffered from and the more and more robust competition from other China oriented tech companies, the JV3.0 model specifically adopts valuable insights learned from this spotty past track record, and leverages the absolute latest regulatory developments in China’s Internet/telecoms sector to maximize opportunities for success in the China market.
In fact, DaHui has spearheaded the whole development of the JV3.0 model to date. The inaugural JV3.0 successfully launched in China, which made a profound market impact, was the new joint venture between Sequoia CBC and Evernote, another Silicon Valley based company and the world’s leading notes app developer. Since the official setup in 2018, Evernote’s China JV (with the new Chinese branding “Yinxiang”) has gone on to achieve great success in the China market and has recently completed an onshore Series B financing totaling hundreds of millions of RMB. Serving as the lead counsel over the entire course of the Yinxiang JV’s establishment and subsequent success story, DaHui has played a key role in the design and optimization of these landmark JV3.0 innovations since 2017, in every major respect.
The DaHui team for the above JV3.0 projects is led by various partners of the wider corporate team, including Richard Ma, Brendon Wu, Jacky Zhu and Gary Li. Partner Joanna Jiang also led DaHui’s TMT regulatory team, which handled complicated regulatory licensing/permit issues in such projects, particularly with respect to foreign investment restrictions. Mark Young and Chris Beall from DaHui’s New York office advised on common law aspects of these transactions. DaHui’s experts Joy Wang and Kun Yuan also participated on various in-depth IP matters related to the deals.