"Chinese growth offers opportunities for CAs", The CA Magazine (November 2014)

Kenneth Morrison shared his insights on China with Ian Harper for the article "Chinese growth offers opportunities for CAs".

His comments, extracted from the article, were:

[...]

First of all, just how big is the Chinese economy?

Ken Morrison CA of Mazars in Hong Kong, who chairs the ICAS members' group there, notes that the Chinese economy has grown at just under 10 per cent per annum for the past 32 years. Looking ahead, however, he is cautious, "China's business model is changing from an export led, low-cost 'manufacturer to the world', to one where an increasing proportion of production is being diverted to domestic consumption. One of the key challenges facing China in the future is demographics - an increasingly ageing population."

Ken says that China has a "20 year window of opportunity before this demographic burden bites" and whether it takes this hinges on the ability of President Xi Jinping to address such key issues as the environment, education, and corruption.

The role of Hong Kong

And what of Hong Kong, where prosperity is increasingly intertwined with that of the mainland since the transfer from British rule in 1997?

Ken Morrison says, "One of the key competitive advantages [Hong Kong] has long enjoyed has been the rule of law. In addition, the absence of overly bureaucratic controls and a stable political environment have been significant to its past success. However, increasing civil unrest, the struggle for democratic reform under the 'one country two systems' formula, and a lack of leadership on the part of the Hong Kong Government has had a detrimental impact on the 'can do' spirit of the territory. Going forward, this will need to change if Hong Kong is to maintain its position as an international financial and logistics centre within Greater China and Asia."

Ken also adds, "Companies and investors are increasingly going direct to the key centres of business in the mainland and thereby bypassing Hong Kong as the intermediate step in their China developments." [...]

Opportunities for UK business

[...]  Ken Morrison also points to opportunities in telecommunications, media and technology; financial services; and consumer products. [...]

Building and managing effective partnerships

[...]  Ken Morrison agrees, "To succeed, international companies need to have a very clear strategy and an ability to implement and adapt. They need to be very clear on why they are in China and in what segment(s) of the market they wish to compete."

Ken adds that there are also significant regulatory challenges, "Officials do not always apply the regulations in a consistent manner. Relationships with officials are often key in navigating through the relevant regulations."  [...]

So what does this spell in terms of opportunities for CAs?

[...]  Ken Morrison points out that while there was once a shortage of local expertise, the landscape is changing, "In recent years, the Ministry of Finance has been keen to see 'home-grown' accounting firms develop and expand and for them to go out into the international markets beyond China, accompanying the outbound investments from China that are gathering pace. It is increasingly important to be regarded as a 'local but international' firm rather than 'foreign'."

To read the full article, please click here.

* ICAS is a professional body for more than 20,000 world class business men and women who work in the UK and in more than 100 countries around the world. 

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Credits: Article written by Ian Harper for CA Magazine