by Chris Devonshire-Ellis, Principal & Founding Partner, Dezan Shira & Associates
With me there is only one area where I feel truly disappointed, and that is the air quality. It is shocking, and this evil has spread across China like the Biblical Plagues.
In Beijing, where I now live (and am shortly about to move from), the broken promises of the 2008 Olympics lie in the air quality. It was great for those immaculate three weeks of China’s Olympics, yet the CCP’s own mantra of “sustainable development” has been shown to come up short. The city air is filthy and worse than before. For a modern, developing nation talking of sending a man to the moon, the state of the capital city is a disgrace. Expatriates leaving China, although there may be other reasons for relocating, at least have that option. I feel sorry for the millions of Chinese who do not and who have to breathe in the filth. It’s China’s most pressing issue. But again, it’s not why I’m relocating – although I have heard many Hong Kong and China-based expats, especially with young children, provide it as a reason, and I would not disagree with their sentiments. China’s air is poisonous.
Otherwise, relocation is to do with sheer growth. I’ve developed the business out of China and expanded into India, Vietnam, and Southeast Asia.
India is growing at a more rapid pace than China
India is a blast, totally different to China, and equally as capable of being incredibly frustrating. It’s also right in your face; there is no escape from the moment you land from the heat, the people, and sometimes the squalor. For some, that’s too much to take. However whereas in India, everything is on display, in China, problems remain hidden. In reality the two countries make fascinating comparisons, and the perceptions about India are largely outmoded.
In terms of the bureaucracy, India isn’t that much more difficult than China to be honest. In fact, in terms of setting up the equivalent of a representative office in India, there are two procedural steps less than in China. Comparisons are to some extent meaningless, all I can say is that the two can be equally problematic, but that they are so in different ways. Despite the media attention on India’s ramshackle politics, things are getting done, and both the demographic pointers and our own figures show that growth is now occurring at a more rapid pace in India than in China. Our Indian operations are developing accordingly, and we have many clients we originally assisted in China now investing into the Indian market. Increasingly, India is becoming an important destination for FDI, moving our practice out of China and into Asia was one of the smarter strategic moves I made.
Vietnam is adding manufacturing capacity as costs increase in China, especially South China
Having taken the leap to India, Vietnam swiftly followed. While India is rather like China in that it offers both a large and established middle class consumer market and cheap labor, Vietnam is really a China play. As manufacturing costs increase, and particularly so in South China, that manufacturing capacity is being added in Vietnam instead. We have examined the operational costs of both China, India and Vietnam several times, and our complimentary report on the subject can be downloaded free from our Asia Briefing website here. Our popular Vietnam Briefing website is here.
We are today an Asian practice, not a China focused one.
The future of Asia, including China and India, is very much tied to ASEAN
However, we haven’t finished with just India and Vietnam. We maintain huge interest in investing elsewhere in Emerging Asia, with our own recent Asia Briefing reports on Myanmar outlining the issues investors face. We’ve yet to establish our own operations there, but countries such as Cambodia, Thailand and Indonesia are all of interest for us to establish a presence later.
These nations are all members of the ASEAN trading and economic bloc, and we see the future of Asia – including China and India – very much tied to the developments in ASEAN.
With the entire bloc coming into complete free trade in 2015, and with both China and India having double tax treaties with ASEAN, the dynamics of business in Asia are shifting, and it is important for businesses in or dealing with China to be aware of the implications.
Many have not yet understood what is happening, and it remains an important and little understood matter. I wrote about the subject here: Why ASEAN Matters For Your China Business.
There is too much concentration of resources purely upon the China market in my opinion, and with the global slowdown still manifesting itself, the tides of investment and opportunity are changing. I also wrote about the perils of concentrating too much on China in “China Glare”. The entire issue concerning developing ASEAN is the reason we established a presence in Singapore last year, and that too is now doing well. As Hong Kong is an international financial center for China, Singapore is the same for ASEAN, and with low tax rates of 16.5 percent and 17 percent respectively, and no tax at all on dividends realized externally from their own borders, both remain and will continue to develop as international business hubs. We wrote a comparison between using Hong Kong and Singapore companies for holding operations in China and Asia here.
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Aug. 13 – After some 23 years in China, 20 with the firm I established, Dezan Shira & Associates, it is time to move on. But why? China has been very good to me of course; it took a 30-year-old with no real sense of direction in his career and turned him into a millionaire entrepreneur with offices around the world. So why change that?
There have been a number of fairly prominent expats leaving China recently, as a friend of mine said “It’s the end of an era.”
Chris Devonshire-Ellis is the founder of Dezan Shira & Associates.
Established in 1992 and now in its twentieth year, the practice has eleven offices in China, offices in India, Vietnam, Hong Kong, Singapore, and liaison offices in Italy and the United States. Dezan Shira & Associates services multinational clients from numerous countries all over the world, and is a member of the Leading Edge Alliance of global accountants and auditors. The alliance obtained a combined global annual turnover in excess of US$2.7 billion in 2011. Chris became the Baron of Coigach, a Scottish title of nobility dating back to 1511, in April 2011.
Chris also founded the Asia Briefing publishing house in 1999 with its well-received China Briefing magazines and books concerning matters of Chinese business law and tax. Chris has edited and co-edited several best-selling books about business in China, including regional guides to Beijing and Shanghai, in addition to various technical guides concerning corporate establishment, foreign direct investment, business law and tax in China.
In 2007, he founded the India Briefing brand, which also publishes business magazines and guidebooks concerning Indian foreign investment law and tax matters. He established Vietnam Briefing in 2008, Russia Briefing in 2010, and Mongolia Briefing in the summer of 2011. Chris can also be read on the China-India geopolitically focused website 2point6billion.com.