Student Seminar on

China’s Entry to the WTO:

Challenges & Opportunities for Hong Kong Accountants

「中國入世﹕香港會計師的機遇與挑戰」研討會

Edward K. F. ChowVice President of HKSA

19 October 2002

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China’s economic development and business opportunities

– pre WTO and post WTO

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Pre-WTO

Transition from planned economy to socialist market economy. Via 5 year plans.

GDP growth during 9-5 (1996-2000) averaged 8%.

GDP growth during 10-5 (2001-2005) to average 7%. 2002-7.9%.

Encourage domestic consumption.

Export less than 10% of GDP.

Foreign direct investment growth 15% plus. Significant proportion from Hong Kong or via Hong Kong.

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Development of the capital market and accounting / reporting standards in China

All happened within last 15 years.

Accounting Standards, Auditing Standards.

Opening of Shanghai and Shenzhen Stock Exchanges.

Equity (PO) shares traded only. Debt market developing.

Banking and insurance market opening very slowly.

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Basic structure of a functioning economy formed

Manufacturing base

Consumer market

Banking industry

Equity market

Housing market

Social welfare system

Taxation revenue collection satisfactory

One of highest foreign currency reserve countries

Except: RMB not yet freely convertible

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WTO Membership

To be part of international community

To raise profile of China and Chinese people

Two types of agreements:

— bi-lateral agreements (between two countries)

— The WTO Treaty (Doha November 2001)

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Opening up of markets

Reduction of import duties

Implementation time-table

Treaty legally binding. Can be sued.

Examples:

* Import of cars

* Steel

* Agricultural products

WTO Membership means :

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* Service industries – accounting, legal, banking insurance

* Telecom industry

* Ports

* Oil and Gas

Refer to Guidance Index on Foreign Investment – effective 1 April 2002. (MOFTEC website)

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Guandung Province has highest GDP in all China

FDI mostly from Hong Kong

100,000 Hong Kong people stationed / commute to / from Guandung

The role of Hong Kong companies and accountants in the economic development in China

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The challenges ahead :

attributes and skillsets required

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Business Consulting

JV Negotiation / Formation

Corporate Finance

Recruitment

Corporating Reporting / Investor Relations

Executive Directors

Independent Directors/Audit Committees

Management (GM)

CFO / FC / CA

Company Based Individual Based

功能分析非執業執業

Audit

Tax

ReportingAccountants

Insolvency

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優化管理

協助

How do we add value如何令僱主，客戶增值

成本效益

Do we have a competitive advantage

? ?

?

?

?

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1. Technical Skills

2. Soft Skills

3. Experience & Exposure

Capital ( 資本 ) ﹕FDI

Skills Sets

Advantage 優勢

有 / 冇

有 / 冇

有 / 冇

有 / 冇

有 / 冇

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突出 專業人士

OUTSTANDINGPROFESSIONALS

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1. H. K. SSAPs

2. I A S

3. Conducting / preparing for Meetings

Skills, Experience & Exposure

有 / 冇

有 / 冇

有 / 冇

有 / 冇

4. Process of Management

(a) Shareholders

(b)Board / Audit Committee

(c) Other Committees

(Corporate Governance aspects)

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Process of Management

Corporate

(a) Corporate planning / strategic planning

(b) Risk management / compliance / internal controls

(c) Preparation of business plan

(d) Preparation of budgets?

(e) Preparation of monthly reports — ?

(f) Preparation of financial statements / annual report

(g) Preparation of announcements

(h) Review / deciding on the above

有 / 冇

有 / 冇

有 / 冇

有 / 冇

有 / 冇

有 / 冇

有 / 冇

有 / 冇

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Process of Management

Operations

(a) M I S / I T

(b) Supply chain / sourcing / out sourcing

(c) Integration — forward, backward, horizontal, vertical

(d) Branch networking

(e) Cross border — markets / M & A outside Chinese Mainland

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1. Linguistic skills — English

2. Investor relations / road shows

3. Hong Kong and International contacts — business & others

4. Banking, corporate and project finance, financial services experience

5. Have passport, will travel

Soft skills, Experience & Exposure

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Target Companies / Employers / Clients

A. Sino-foreign JV Companies — go with the FDI investors, shareholders

— probably listed or planning to list

— where funds are expected to be raised

— add value /knowledge /experience

— with potential to list

B. Large S. O. E.s or red chips ( 國企 )

C. Privately owned enterprises with potential ( 民企 )

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• Culture

• Social Behaviour

• Political ideology

• Manpower policy

• Economic ideology

• Management style

• Pay / remuneration parity (or disparity)

BEWARE OF DIFFERENCES IN

一國兩制

了解國情

知己知彼

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How the Society’s Qualification Programme (QP) can help equip students with the skills necessary for a career in China ?

QP

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The QP Programme is prepared by Hong Kong and International Experts

It is recognized INTERNATIONALLY

HKSA will sign Mutual Recognition Agreements with CAGE group November 2002

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4 Modules

Module A : Financial Reporting

Module B : Financial Management

Module C : Auditing and Information Management

Module D : Taxation

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Module Assessment

Self-study

Four 3-Hour workshops led by experienced practitioners

2 Hour open book examination

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Final Professional Examination

Integrate knowledge and skills

Two 3 hour sessions

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