PwC Opportunities for HK-based Accountants in China’s post- WTO Market Tommy Fung 19 October 2002

PwC Opportunities in the post-WTO era Opportunities only exist in the north? No MANY opportunities in HK too

PwC Non-discriminating - MFN - National treatment Free competition Transparency Valid protection Trade = goods, services, IP, investments Main Principles of WTO

PwC Open trade gateway / market - Custom duties - Quota, permit, etc. Freedom of investments - Capital source - Business operations Open services sectors - Financial services - Telecom - Accounting, consultancy, etc. Some Commitments of China on entry to WTO

PwC Impact of WTO entry on China markets Globalisation More business, more competition Less protection on local businesses More complex business and operating environment Changes in China laws and regulations

PwC Opportunities & Risks for Foreign Entities Enormous market Less trade/entry barrier Expansion opportunities Inadequate legal protection Lack of reliable market information Lack of experiences

PwC Opportunities for Hong Kong Great market potential Proximity of China market Relaxed investment requirements Centre for China entities’ financing activities Base for foreign investments Strategic investments

PwC What these mean to Hong Kong? Probably with a smaller share of a bigger pie, Hong Kong will overall be better off with China’s entry to the WTO.

PwC What should accountants do? Identify the needs of different parties What China entities needs? What HK entities need? What foreign entities need?

PwC China Entities ’ Needs Financing knowledge & capital needs Understanding of foreign markets Risk management Changes in laws and regulations Overseas/International accounting and financial reporting requirements Foreign investment opportunities Internal control and corporate governance

PwC HK/Foreign Entities ’ Needs Knowledge about China markets Understanding of the operation mechanisms in China (e.g. banking, financing and various filing/registration procedures) Identification of entry/expansion risks China laws and regulations China accounting and financial reporting requirements Investment opportunities and requirements

PwC Opportunities for HK-based Accountants in Practice Relaxed rules to practise in China Big market for consulting and advisory services to HK, China and foreign entities

PwC Opportunities for HK-based Accountants Financing advises to China entities Explore more financing opportunities Identify the optimal financing mode outside China Advisors for IPO/debt financing activities Financing advises to foreign entities Help understand the existing banking/financing system in China Provide advises on the operation of foreign currency exchanges and other related mechanism in China

PwC Opportunities for HK-based Accountants Understand foreign/China markets Trade disputes Explore market information availability Market analyses – which market and when to go? How to go?

PwC Opportunities for HK-based Accountants Risk management Advise and guide the client to identify risks, e.g. business, regulatory risks Arouse clients’ attention to seek other professional advises when needed, e.g. IT, internal control/operation procedures, knowledge management Help identify risk management measurements

PwC Opportunities for HK-based Accountants Laws and regulations Explore the information of changes in laws and regulations owing to the China’s entry of WTO Impact of changes to business Tax planning for foreign investments

PwC Opportunities for HK-based Accountants Accounting advices to China entities Bridge the knowledge gap between PRC GAAP and internationally recognised accounting standards Provide training to staff regarding internationally recognised accounting standards Accounting advices to foreign entities Help understand PRC GAAP Help interpret the PRC GAAP financial statements

PwC Opportunities for HK-based Accountants Foreign investment opportunities Explore investment opportunities Understand overseas investment & financial instruments China investment opportunities Help understand investment requirements Explore information available Help determine the best way to invest in China

PwC Opportunities for HK-based Accountants Internal control and corporate governance Help introduce these concepts to China entities Provide advises on design and implementation of plans

PwC Opportunities for HK-based Accountants in Commercial Sector Help the entity focus on business development opportunities SWOT analysis for the entity Introduce/reinforce risk management procedures in the due course of expansion Market positioning Legal protection

PwC Not simply 2 options Many in-between arrangements Based in Hong Kong or stationed in China?

PwC Strategy of the entity Knowledge and experience Network Personal factors Based in Hong Kong or stationed in China?

PwC What should HK accountants do now? Keep abreast of international and China development Familiar with China laws and regulations, and the schedule of liberalisation of different sectors Familiar with international and PRC accounting requirements Maintain high ethical standards and professionalism Improve linguistic and soft skills Master new skills and technology

PwC Hong Kong is the place where East meets West. This is also where the competitive advantage of HK Accountants lie.