Chai Hua

China Daily (Hong Kong) - - BUSINESS HK - Con­tact the writer at [email protected]­nadai­lyhk.com

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.”

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