Www.dezshira.com © 2005 Dezan Shira & Associates Ltd. All rights reserved. Dezan Shira & Associates...

www.dezshira.com

© 2005 Dezan Shira & Associates Ltd. All rights reserved. © 2005 Dezan Shira & Associates Ltd. All rights reserved.

Dezan Shira& Associates

Developing An SME In China May 22nd 2008

Chris Devonshire EllisSenior Partner, Dezan Shira & Associates;

Publisher, China Briefing

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© 2005 Dezan Shira & Associates Ltd. All rights reserved.

Dezan Shira & Associates

1992 – One office in Hong Kong, one in Shenzhen – 3 staff. 1992 – One office in Hong Kong, one in Shenzhen – 3 staff. 2008 – Sixteen Regional offices across China, Hong Kong, 2008 – Sixteen Regional offices across China, Hong Kong,

Singapore, India & Vietnam – 250 staffSingapore, India & Vietnam – 250 staff Retained by @1,800 clients from over 70 countriesRetained by @1,800 clients from over 70 countries Professional legal, tax and audit services for Foreign Direct Professional legal, tax and audit services for Foreign Direct

Investors into these marketsInvestors into these markets Members of the Leading Edge Alliance with a combined Members of the Leading Edge Alliance with a combined

global turnover (2007) of USD1.8 billion global turnover (2007) of USD1.8 billion

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China Briefing www.china-briefing.com

1999: First monthly issue 750 copies 1999: First monthly issue 750 copies

2008: Monthly print 40,000 copies, online 250,000 subscribers, 2008: Monthly print 40,000 copies, online 250,000 subscribers,

seven languages, a regular series of best selling businessseven languages, a regular series of best selling business

guides plus a daily news service.guides plus a daily news service.

India Briefing India Briefing www.india-briefing.comwww.india-briefing.com

Vietnam Briefing Vietnam Briefing www.vietnam-briefing.comwww.vietnam-briefing.com

2point6billion 2point6billion www.2point6billion.comwww.2point6billion.com

Communist Tax Lawyer Communist Tax Lawyer www.communisttaxlawyer.comwww.communisttaxlawyer.com

China Expat China Expat www.chinaexpat.comwww.chinaexpat.com

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Characteristics of SME’s

Largely driven by entrepreneurs Largely driven by entrepreneurs Tend to lack depth of admin and support personnel Tend to lack depth of admin and support personnel Tend to have lack of funds Tend to have lack of funds Often survive on ego alone Often survive on ego alone Usually driven by vision Usually driven by vision Tend to try to overcome obstacles by sheer effortTend to try to overcome obstacles by sheer effortHow to survive and prosper always an issueHow to survive and prosper always an issue

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Why Did You Set Up In China ?

Bravado Bravado NaivetyNaivety Stupidity Stupidity OpportunityOpportunity

The Opportunity can outweigh the downsides…The Opportunity can outweigh the downsides…

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Doing Business In China

To Succeed, You Need To Become More Chinese. To Succeed, You Need To Become More Chinese. To Succeed, You Need A Vision To Succeed, You Need A Vision To Succeed, You Need To Be Better Than The RestTo Succeed, You Need To Be Better Than The Rest To Succeed, You Must SacrificeTo Succeed, You Must Sacrifice To Succeed, You Must Overcome ObstaclesTo Succeed, You Must Overcome Obstacles To Succeed, You Must Be Honest To Succeed, You Must Be Honest To Succeed, You Must Celebrate Your FailuresTo Succeed, You Must Celebrate Your Failures To Succeed, You Must Share That SuccessTo Succeed, You Must Share That Success To Succeed, You Must Become SuccessfulTo Succeed, You Must Become Successful

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Becoming More Chinese (it’s all about the money)

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It’s All About The Money

RMB100 = USD14RMB100 = USD14

The RMB is worth 7.14% the value of the The RMB is worth 7.14% the value of the USD. USD.

Right Or Wrong ? Right Or Wrong ?

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Average Chinese canteen lunch cost: RMB12Average Chinese canteen lunch cost: RMB12Average Western canteen lunch cost: RMB45 Average Western canteen lunch cost: RMB45 Average Price Local Beer: RMB10Average Price Local Beer: RMB10Average Price Western Beer: RMB30 Average Price Western Beer: RMB30 Average Chinese Salary Beijing: RMB3,000-10,000Average Chinese Salary Beijing: RMB3,000-10,000Average Western Salary Beijing: USD3,000-10,000Average Western Salary Beijing: USD3,000-10,000Average Chinese Apartment Rental BJ: RMB2,000Average Chinese Apartment Rental BJ: RMB2,000Average Western Apartment Rental BJ: USD2,000Average Western Apartment Rental BJ: USD2,000

Western Costs average out at 8 times more than Western Costs average out at 8 times more than Chinese in all commodities purchases. Chinese in all commodities purchases.

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Chinese: Wet MarketChinese: Wet Market

Westerner: Jenny Lou’sWesterner: Jenny Lou’s

Chinese: Monthly Mortgage: RMB2,000 pcmChinese: Monthly Mortgage: RMB2,000 pcm

Western: Monthly Rent: USD2,500 pcm Western: Monthly Rent: USD2,500 pcm

Chinese: Great Wall, RMB45Chinese: Great Wall, RMB45

Western: Hardys, RMB450Western: Hardys, RMB450

Chinese: Local bar with friendsChinese: Local bar with friends

Western: CentroWestern: Centro

Chinese: Hongtashan: RMB7 Chinese: Hongtashan: RMB7

Western: 555, Marlboro: RMB15 Western: 555, Marlboro: RMB15

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The truth is, if you become more Chinese – the value of theThe truth is, if you become more Chinese – the value of the

RMB becomes the same as the value of the USD. RMB becomes the same as the value of the USD.

SME’s often struggle with financing. Do YOU really understand SME’s often struggle with financing. Do YOU really understand the value of what the RMB can buy ? the value of what the RMB can buy ?

Are YOU competing with local businesses ? Are YOU competing with local businesses ?

Become more Chinese. Understand the true value of the Become more Chinese. Understand the true value of the currency and just how much it can buy. currency and just how much it can buy.

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To Succeed, You Need A Vision

So What’s Yours ? So What’s Yours ?

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To Succeed, You Need To Be Better Than The Rest

Which Means:Which Means:

You must think smarterYou must think smarter

You must work harderYou must work harder

You must be prepared to do the thingsYou must be prepared to do the things

they will not dothey will not do

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You Need To Be Better Than The Rest

Learn Through Your MistakesLearn Through Your Mistakes

Celebrate Your Failures – You’reCelebrate Your Failures – You’re

Learning ! Learning !

China Briefing was born from a big mistake. China Briefing was born from a big mistake.

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To Succeed, You Must Make Sacrifices

What Sacrifices Have You Made What Sacrifices Have You Made Through Setting Up Your SME ? Through Setting Up Your SME ?

A Sacrifice is made in the name of love. A Sacrifice is made in the name of love.

Love Your Business. Love Your Business.

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To Succeed, You Must Overcome Obstacles

(Obstacles Usually Arise Due To A Lack Of Money)(Obstacles Usually Arise Due To A Lack Of Money)

Think Out Of The Box. Smaller Companies Can Get Away WithThink Out Of The Box. Smaller Companies Can Get Away With

Far More Outlandish Behavior. Don’t Push An SME Into Far More Outlandish Behavior. Don’t Push An SME Into

Corporate Standards All The Time. You Can Be More Flexible. Corporate Standards All The Time. You Can Be More Flexible.

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Thinking Out Of The Box…

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To Succeed, You Must Celebrate Your Failures

No-one wins all the time ! No-one wins all the time !

Losing Big Contracts at the death…Losing Big Contracts at the death…

Key Staff leaving…Key Staff leaving…

Just Making a Huge Mess Up of a Client…Just Making a Huge Mess Up of a Client…

Examine your exposure, learn, and move onExamine your exposure, learn, and move on

And treat yourself ! You can’t succeed without learningAnd treat yourself ! You can’t succeed without learning

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To Succeed, You Must Be Honest

Financial Integrity is paramountFinancial Integrity is paramount Treat Your Suppliers and Vendors with Respect Treat Your Suppliers and Vendors with Respect Rewards May be Just Around The Corner Rewards May be Just Around The Corner BS gets rewarded however with BSBS gets rewarded however with BS Be Honest with yourself and with others and it will come back Be Honest with yourself and with others and it will come back

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To Succeed, You Must Share That Success

Chris Devonshire-Ellis:Chris Devonshire-Ellis: Terrible administratorTerrible administrator I can’t even balance my checkbook I can’t even balance my checkbook Dreadful Chinese Dreadful Chinese Wearer of weird bow ties…Wearer of weird bow ties…

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Sharing That Success

But I learnt to delegate and bring in people in specific areas But I learnt to delegate and bring in people in specific areas that I am weak in. that I am weak in.

Enables people to work to their strengths.Enables people to work to their strengths. Shares the burden of workShares the burden of work Shares the decision making Shares the decision making Can be an emotional decision to part with equity or Can be an emotional decision to part with equity or

responsibilities, but at some point it must be undertaken in responsibilities, but at some point it must be undertaken in order to grow. order to grow.

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Sharing That Success (albeit begrudgingly)

SME’s can duck and dive to some extentSME’s can duck and dive to some extent But at some point you need to get serious about your But at some point you need to get serious about your

businessbusiness What is the true cost of doing business? What is the true cost of doing business? Non-compliance eventually breeds weaknesses. Non-compliance eventually breeds weaknesses. You need to look at getting into compliance as soon as you You need to look at getting into compliance as soon as you

can. can. The extra ‘burden’ gives you security and lessens your The extra ‘burden’ gives you security and lessens your

exposure to risk exposure to risk There comes a time to dot the i’s and x the t’s There comes a time to dot the i’s and x the t’s

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To Succeed, You Must Become Successful

Fear of Success Can Impact Fear of Success Can Impact SMEs often lack confidence SMEs often lack confidence When growing, remind staff of itWhen growing, remind staff of it Don’t get trapped in “Small company syndrome” Don’t get trapped in “Small company syndrome” Don’t believe “You’ll never do that” Don’t believe “You’ll never do that” A large part of being an SME IS being inventive A large part of being an SME IS being inventive

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Finally…Success In Three Words

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Success In Three Words

(Hire My Firm)(Hire My Firm)

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Thank You ! Thank You !

Questions ? Questions ?

Contact: Chris Devonshire-EllisContact: Chris Devonshire-Ellis

[email protected]@dezshira.com

Dezan Shira & Associates: Dezan Shira & Associates: www.dezshira.comwww.dezshira.com

China Briefing: China Briefing: www.china-briefing.comwww.china-briefing.com

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