FOR the first time ever, BDO held its Biennial International Partners’ conference in Asia, well in China to be more precise, hosted by BDO Lixin, our member firm in China, for close to 600 people from across the globe. While I am lucky to visit this diverse country most years, for many this was their first time in China. Whether seeing the country for the first time, or the fiftieth, I still share the same sense of amazement and awe as the first timers, with each visit.
I took four days looking around Beijing, taking in all that it has to offer, from the worst (three days in smog that was 18 times worse than the recommended pollution level), to the best, (the wonders of the Forbidden City and the Great Wall of China). I was struck by the vibrant buzz of young, sophisticated Chinese people enjoying shopping, dining and socialising, but also by the vast numbers of older Chinese tourists at the Great Wall in Badaling, many from Mongolia and far flung corners of China, who are now wealthy enough to go on vacation.
The unavoidable feeling of increasing wealth was really underlined following the short flight from Beijing to Shanghai. On touchdown I was surprised to see just how much the city has changed. The skyline, in particular, reflects the economic growth in the region. The iconic 46-storey Hang Seng Bank Tower is now dwarfed by the construction of the twisting Shanghai Tower with its 121 floors. The Bund was as hectic as ever, and the Shanghai International Conference Centre, where the BDO Biennial was held, was enormous and resplendent.
At the conference itself, our guest speaker, Haiyan Wang, chairman of the China-India Institute, gave a blend of historical perspectives on China, her recollections as a child under the Cultural Revolution and her insights on the road to growth that China is now on after centuries of slow progress, having failed to continue the momentum built up as the world’s leading economy in the 1400’s.
Despite the fact that in recent years China’s GDP has dipped from double digit growth to just over 7%, it is still expected to overtake the USA by circa 2025. The less eye-catching growth experienced by developed economies is not the case here and the country is still on its way to becoming the world’s leading economy once more, even with a slowdown.
On a more cautionary note, Haiyan also reminded us of the legacy of the one child policy, their population will age and shrink within a generation or two, there will be less workers to the point that the GDP they earn and accumulate will be needed to provide substantial welfare and pensions and in the shorter term, they will still need to import food and, interestingly, water.
So what are the Chinese doing about this? The recognition that foreign investment will help to maintain strong GDP in coming years was a strong theme throughout conversations taking place during the conference.
I had the pleasure of meeting representatives of the Xiuzhou District of the city of Jiaxing, a small city of 4.5 million people on the outskirts of Shanghai, a new, green and exciting city. Larger than the UK’s second, third and fourth largest cities put together, yet not even in China’s top 20, Jiaxing has an economic plan that has zoned the sectors it wants to attract and the countries they want to approach for inward investment. One of my colleagues astutely observed that if they wished to attract German companies with German management, they might need to think about opening a school that taught in German. Party Secretary and Director, Li Chenyaun, responded saying “We have one already”.
The message is clear: China’s economic boom is not being viewed within the country as a one-off event. It is committed to using this as a foundation for long-term growth, for both domestic companies and inward investment.
We are experiencing this first hand. BDO managing partner Simon Michael’s last Postcard from China outlined the size of our Chinese operations at 7,500 people. BDO Lixin now stands at close to 8,500 people, one of the largest international accountancy firms in China, and by reference to their client portfolio, they would be seen as number three in their market! While we were in Shanghai, we witnessed the signing of the agreement where BDO International Limited and BDO China have agreed to invest in BDO Hong Kong, which is expected to contribute to the further growth of BDO in China and Hong Kong. This clearly reflects the fast growing demand for business advisory and accountancy services in the region. The future is upon us.
Kim Hayward, international liaison partner, BDO