Good time for investment for Chinese Companies
Good time for investment for Chinese Companies
-Interview with KPMG Senior Manager Sander Grunewald
Sander Grunewald, senior manager at KPMG China Desk, has returned to the Netherlands with two years experience of working in China and continues his work at KPMG to support Chinese companies to set up their business in the Netherlands as well as to support Dutch companies to enter the Chinese market. We were glad to have him for an informative interview.
During the interview, Sander introduced his own work experience in Shanghai under the Chinese culture and the services provided by KPMG for both outbound and inbound investments between China and the Netherlands.
Why did you choose China in the first place?
Over last 5,6 years, you start reading more and more about china. The market has enormous potential due to the size and the development over there. I was looking for a way to support KPMG in further growing and with experience that we have in European countries and contribute to kpmg growth in china by bringing in some of the experience and also for a personal challenge to learn to work with Chinese people and completely different culture, different language, different business dynamics in a high growth market.
Was there anything different from your expectations?
I would say yes. There are a lot of energy and dynamics in the Chinese development. Everybody is excited in participating in the growth and everybody wants to contribute in their way. Arriving there, I was surprised by the base???What is meant???? of everything. When I arrived, the financial crisis was at its top, also the economy slowed down in China. For the Chinese, it was new because in the past years there’s only growth, growth, growth. They were quite anxious how this would affect their eco. Pretty soon, it picked up again last year. Which is incredible to experience.
Language and culture was a challenge to succeed in effective management in teams in china, that’s why I had to learn a lot during this period about learning how to become effective in China business environment. But to work with Chinese people you have to readjust your management style. Chinese people are motivated and stimulated in a different way than in the Netherlands which is great to experience, and this learns how to work effectively together with Chinese clients and colleague teams.
Did financial crisis have any impact on cross-border investment?
The economic crisis is an interesting moment for Chinese companies to look into Europe, Because during the crisis, new opportunities arise to invest in Europe . Europe is recovering but still a lot of companies were in the need of cash and/or looking for market access to fast growing Chinese market. Chinese companies are, due to significant increase over last years, cash rich. In that way, they can cooperate with European companies. It could be an entrance for Chinese companies into the European markets. For European companies, it can be sharing knowledge, experience, maybe entering Chinese markets. Many Chinese companies are entering Europe: China outbound investment. China buying companies in the rest of the world or directly investing abroad. That’s increasing a lot. In a lot of situations KPMG is supporting these companies in market entry, setting up business and tax efficient structures in NL and improving business effectiveness in their European acquisitions.
Are there any obstacles for the companies which are starting their investment? How to solve the problems?
Chinese companies get more and more experience going abroad, but still in the beginning. There are several ways of learning. For example, from mistakes, but that is expensive. A good alternative can be to bring in experienced advisors, before coming to eu and during buiding their companies in eu (e.g. post acquisition support). KPMG research shows that more Chinese companies understand the added value of good advisor to select the right location (market entry), select targets and analyse business and tax structures to set up your biz and also what operating models do best fit your objective to enter the European market. After setup, there are more additional challenges to improve your companies and adapt to new environment.Bigger companies are ofter more experienced in doing business abroad and small companies shall learn from their experience, but in the end its aboutfinding a good balance between keeping your Chinese value and culture towards integrating into European ones. To deal with the difference is a big challenge therefore for both inbound and outbound investments. We acknowledge that extensive experiences with the country, people and culture (and ofcourse business knowledge) is prerequisite to provide external support and advices and to be of great support to our clients.
How to choose a balance point between different cultures?
The balance point depends on the business type. If it is an import and export corporation which has a close relationship with China, and only sells products to Europe without many contacts to end customers, the corporation could choose to maintain more Chinese business culture. If it is a corporation that main has European end customers, the corporation has to adjust to European business culture and customs to acquire sustainable developments.
What services does KPMG China Desk offer?
We support both inbound and outbound investments, both in China and the Netherlands (Europe). We have many offices in Europe and in China that work closely together.E.g in the Netherlandss we have Chinese speaking and China experienced staff. For example, if there are Chinese clients, we help them with the analysis of European market. Find what the best place in Europe is to position yourself, how to structure their biz, set up entity (tax and business effective), support setting up the organization, get rightmanagement information and conrol and how to comply with regulations. And, if applicable and allowed, we do offer financial audit. Help com to do that. Therefore, we could say KPMG could offer the whole set of advisory services from the very first moment of planning your investment or your company in Europe.
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