Gazing out of the window in Deloitte’s office in Shenzhen at a myriad of skyscrapers dotting the city’s ever changing skyline, the group’s global chief executive officer Punit Renjen is fascinated by the metropolis’ incredible transformation from a sleepy fishing village to “China’s Silicon Valley”.
“What China has accomplished over the last 40 years is indeed remarkable,” says Renjen, and he’s proud that Deloitte has contributed to and reaped the benefits from this development.
Setting foot in China many times a year qualifies Renjen to be a witness to the country’s historic reform and opening-up since 1978 and, each time, he uncovers something new, especially on his first visit to Shenzhen.
He found a growing shift in the mindsets of Chinese companies, plus the thrilling opportunities in the technology field. At the same time, he believes the one thing that will not change is the market’s exponential growth.
“China will continue to be one of our strongest markets in terms of business growth across our global network over the next five years with a focus on the technological arena,” Renjen tells China Daily in an interview during his trip in November.
As early as in 1917, Deloitte — one of the world’s “Big Four” professional services organizations — entered the Chinese market with its first location in Shanghai.
Its office in Hong Kong was established in 1972, beginning an era in which it provided professional services, including audit and tax advisory to Hong Kong and multinational companies seeking to enter the Chinese marketplace.
Deloitte’s growth on the mainland was mirrored by China’s rise in the global economy. It gradually launched diversified services, including IPO reporting and expanded to more cities as the reform and opening-up policy gathered steam.
The largest professional services provider in the world by revenue and the number of professionals employed has grown into a network of more than 16,000 staff across China today, delivering a full range of audit and assurance, consulting, financial advisory, risk advisory and tax services.
In addition, the global CEO forecasts that headcount in the country will expand at double-digit rates, so that in the next five years, Deloitte will be twice the size it is today.
“Taking 1.3 billion people and affecting them in the way China has is something I do not think has been seen before in human history,” he says.
Shenzhen, for example, was one of the first special economic zones to implement the policy of reform and opening-up since its introduction in 1978. Today, the city’s GDP has reached 2.24 billion yuan ($355 billion).
“One of our strategies is to tilt to Asia and tilt to China because it’s the right thing and right business thing to do,” Renjen argues.
He notes that China’s growth over the past four decades has been fueled by globalization and an export-oriented mindset, but the country is now looking to further reform the market and the economy and, rightly so, to sustain growth. This means a shift to more domestic consumption will be vital, he stresses.
China has made an outstanding contribution to global consumption growth over the past years. According to a recent Deloitte report, the average annual contribution of China’s final consumption expenditure to global consumption growth from 2013 to 2016 was 23.4 percent — higher than that of the US, the Eurozone or Japan.
Stimulated by strong consumer demand, Renjen believes today’s opportunity is “tremendous for any global enterprise and any global brand that wants to come into China”.
However, he reminds organizations they should realize that Chinese consumers are very discerning and move at their own pace. “Localization will be critically important for international brands, without losing some of the value they have, so adapting to local customs and local needs is going to be incredibly important.”
Besides helping foreign companies enter the Chinese market, including more than half of those on the Fortune Global 500 list, assisting Chinese companies to take their rightful place as global leaders is also full of potential.
Private and State-owned enterprises are looking to become global leaders and their accelerating shift in mindset is a tremendous opportunity for enterprises like Deloitte, says Renjen.
During his visit to Shenzhen, Chinese companies frequently asked Renjen: “How do we take our products and make them global leaders?”
“One said 21 of our products are world-leading, but they want to take another 14 or 15 and make them world-leading as well,” he recalls. “As a result, M&A is going to be a very important part of the growth story for Chinese companies.”
This does not just mean large transactions like ChemChina’s acquisition of Syngenta. Smaller unicorns will also get involved.
Another new opportunity, Renjen says, is the country’s thriving technological hubs, like Shenzhen, and its many technological advances, such as those of internet gurus Alibaba and Tencent, as well as AI unicorn SenseTime, which originated in China.
At a meeting with clients before his interview with China Daily, Renjen learnt they were very interested in the smart city concept, the future of mobility and work — the same areas on which Deloitte is focusing and in which will be making big investments.
For instance, a specific challenge that has caught his attention derives from how data in China’s medical system is disorganized, potentially creating huge opportunities for companies able to use AI to harness that data in a systematic way for customized functions.
To ride these technological advances, Deloitte jointly founded the Smart Open Data Advancement Consortium in November during the Hong Kong Fintech Week.
The consortium aims to bring about unprecedented data-driven innovation on a secure, user-friendly platform to effectively leverage open data in Hong Kong and the Guangdong-Hong Kong-Macao Greater Bay Area.
Deloitte is also planning a hightech center in Shenzhen as part of its “Digital Difference” project in China.
Recently, innovation and technology have become buzzwords in media reports, but can still feel distant from people’s everyday lives.
However, Renjen is optimistic that business demand has emerged that may not have existed just a few years ago. “There’s now an ability to actually get solutions out there and make them profitable.”