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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 -