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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
19 October 2002
Edward K. F. Chow
Vice President of HKSA
China’s economic development
and business opportunities
– pre WTO and post WTO
-1-
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.
-2-
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.
developing.
Debt market
Banking and insurance market opening very slowly.
-3-
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
-4-
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)
-5-
WTO Membership means :
Opening up of markets
Reduction of import duties
Implementation time-table
Treaty legally binding. Can be sued.
Examples:
* Import of cars
* Steel
* Agricultural products
-6-
* 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)
-7-
The role of Hong Kong companies and
accountants in the economic development in
China
Guandung Province has highest GDP in all China
FDI mostly from Hong Kong
100,000 Hong Kong people stationed / commute to /
from Guandung
-8-
The challenges ahead :
attributes and skillsets required
-9-
功能分析
執業
非執業
Business Consulting
Executive Directors
Tax
JV Negotiation / Formation
Independent Directors/
Audit Committees
Reporting
Accountants
Corporate Finance
Management (GM)
Insolvency
Recruitment
CFO / FC / CA
Audit
Corporating Reporting / Investor Relations
Company Based
Individual Based
- 10 -
優化管理
協助
?
成本效益
?
?
How do we add value
如何令僱主,客戶增值
?
Do we have a competitive advantage
?
- 11 -
Advantage 優勢
Capital (資本) ﹕FDI
有 /
冇
Skills Sets
有 /
冇
1.
Technical Skills
有 /
冇
2.
Soft Skills
有 /
冇
3.
Experience &
Exposure
有 /
冇
- 12 -
突出
專業人士
OUTSTANDING
PROFESSIONALS
- 13 -
Skills, Experience & Exposure
1. H. K. SSAPs
有/冇
2. I A S
有/冇
3. Conducting / preparing for Meetings
有/冇
(a) Shareholders
(b) Board / Audit Committee
(c) Other Committees
(Corporate Governance aspects)
4. Process of Management
- 14 -
有/冇
Process of Management
Corporate
(a) Corporate planning / strategic planning
有/冇
(b) Risk management / compliance / internal controls 有 / 冇
(c) Preparation of business plan
有/冇
(d) Preparation of budgets?
有/冇
(e) Preparation of monthly reports — ?
有/冇
(f)
Preparation of financial statements / annual report 有 / 冇
(g) Preparation of announcements
有/冇
(h) Review / deciding on the above
有/冇
- 15 -
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
- 16 -
Soft skills, Experience & Exposure
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
- 17 -
Target Companies / Employers / Clients
A. Sino-foreign JV Companies — go with the FDI
investors,
shareholders
B. Large S. O. E.s or red chips — probably listed or
(國企)
planning to list
— where funds are
expected to be raised
C.
Privately owned enterprises — add value /knowledge
with potential (民企)
/experience
— with potential to list
- 18 -
BEWARE OF DIFFERENCES IN
•
•
•
•
•
•
•
Culture
Social Behaviour
一
國
兩
制
Political ideology
Manpower policy
Economic ideology
Management style
Pay / remuneration parity
(or disparity)
- 19 -
知
己
知
彼
了
解
國
情
How the Society’s Qualification Programme (QP) can
help equip students with the skills necessary for a career
in China ?
QP
- 20 -
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
- 21 -
4 Modules
Module A : Financial Reporting
Module B : Financial Management
Module C : Auditing and Information
Management
Module D: Taxation
- 22 -
Module Assessment
Self-study
Four 3-Hour workshops led by
experienced practitioners
2 Hour open book examination
- 23 -
Final Professional Examination
Integrate knowledge and skills
Two 3 hour sessions
- END - 24 -