15 years in China – Looking at Mongolia, developments in India, Chinese culture and keeping staff happy

November 23, 2007 Posted by China Briefing Reading Time: 10 minutes

Today’s excerpts from the new book “The Story Of A China Practice,” detailing Dezan Shira & Associates first 15 years in China cover looking at Mongolia, developments in India, combining Chinese culture and art in business, and good management practices when dealing with Chinese staff. The book, priced RMB160 (US$20) plus p&p is available from sales@china-briefing.com.

Looking at Mongolia
(excerpt from chapter five, circa 2003)

Meanwhile, we were examining the possibilities of expanding Dezan Shira into other markets. Mongolia, sandwiched between northern China and Siberian Russia, had been independent since 1992, when the Soviet regime collapsed. The land of Genghis Khan was now open for business again after a 70 year period as one of the most closed countries in the world, and the capital, Ulaan Baatar was just a little over an hours flight north of Beijing. Alberto and I went up for a look around.

We met with various law and accounting firms to assess the local market, and determine the extent of foreign direct investment potential. Much of it was in the mining and exploration industries – and still is. We also researched Mongolia’s investment laws and taxes. Things looked interesting. To see how far we could penetrate the market, we also set up a magazine, to determine how easy it would be to market services there. But as a departure, we went along the lines of culture, and began putting something out called Mongolia Expat. Not wanting to alert competition to what we were doing, we kept legal and tax content out, and kept it purely to Mongolian travel issues. Shortly, we found that we had achieved market penetration. Ulaan Baatar is only a small city (population @ 1 million) and our exercise had proved we could market effectively and control such a program from China. We would be able to set up in Mongolia, and market professional services there.

But Alberto and I had a chat. “If we can do Mongolia – then why don’t we try for something larger?” we thought. Assessing what we were good at, we came to the same conclusion: Dezan Shira & Associates knew and understood professional services in huge, developing countries, with an evolving regulatory framework. Plus we were not intimidated by distances. Mongolia would be too small, and too distracting for us. Having had the confidence to know we could manage an international office if we wanted too, we then set our eyes on India.

As for Mongolia Expat magazine, well we kept it. It is now the largest circulation English language print publication in Mongolia, with a monthly full color magazine and website at www.mongoliaexpat.com, and has also spawned a best selling travel guide to the country. Pretty interesting as a subsidiary business for a tax firm, but it gave us the knowledge and the confidence to take on bigger challenges in professional services elsewhere. That would express itself in spectacular fashion as we instead cast our attention towards the heat, dust and chaos of a resurgent India.

Developments in India and Vietnam
(excerpt from chapter six, circa 2007)

After looking at several regional possibilities for expansion, we realized a huge potential from Indian clients wanting to set up in China, as well as our multinational China client base, wanting to set up in India, especially given the impact of new Chinese regulatory and tax reforms taking place, that meant India has become more tax competitive than China, especially in low-cost manufacturing, where margins can be tight. Consequently, in June 2007, Dezan Shira opened up three offices in India, Delhi, Mumbai and Chennai, a web blog dealing with China-India trade issues in the form of www.2point6billion.com, and launched the first issue of India Briefing magazine at www.india-briefing.com, to promote foreign direct investment into that country and to attract some of that to our new regional offices there. It seems to be working; we are generating clients in India and have partnered with some of the most prestigious domestic legal and audit firms in the country to ensure a high standard of service. Meanwhile, we have captured a large volume of the new wave of Indian investors who are now looking at China – bi-lateral trade between the two countries is set to quadruple by 2010 and the firm is positioned in part to be ready itself for this new stream of foreign direct investment into the PRC.

These initiatives have been a great success. Not only has India Briefing proven successful with several issues produced and a fast growing subscriber base developing, the 2point6billion.com blog has also been attracting a great deal of interest.

Events under this brand name have attracted sell out audiences eager to listen to and discuss matters of India – China bilateral relations and trade, and have been well supported by both governments. Indeed, we have been lucky enough for the Indian Ambassador to China, Ms. Rao, to officiate at events and these events will continue during 2008 and beyond as we seek to establish the brand as a bone fide think tank concerning bilateral relations and development. This is certainly borne out by the success of the blog, with commentary posted daily on this huge subject. It’s a unique site and concept, and we suspect that other developing sites may also appear detailing China’s relations with other nations. It’s been a fascinating time to see this approach develop and it fits in extremely well with our other development plans for India, Asia and beyond. Dezan Shira & Associates are about to open up a fourth office in India in Calcutta, which has just established direct flight links to Kunming, and two further offices in Vietnam, (Ho Chi Minh City and Hanoi) as China integrates further with Southeast Asia. We own the title Vietnam Briefing and the magazine and domain have already been registered. The first issue will appear in the second quarter of 2008. We are now a regional practice, with significant experience in handling cross border strategies and business across the region and can now offer much more knowledge than a China-only based firm.

Chinese culture, art and business
(excerpt from chapter six, circa 2007)

One aspect of the firm and its corporate identity has always been a demonstration of our love and understanding for Chinese culture. It showed up in various China Briefing covers over the years, and we believe is an important part of an investor’s ability to succeed in the PRC. In advising clients, we’ve been able to demonstrate not just an understanding of the regulatory environment and what the laws say – but more importantly how these can be interpreted in China. It’s a subtle point lost on many new-to-China businesses and consultants, yet we believe it is a vital component. Without a true feeling for Chinese culture, you can miss the nuances and the implications of some of the “gray” areas of doing business here. Our China Expat website and magazines are a case in point – they avidly illustrate what else we know – business law and tax aside, and are an immensely useful resource, with articles on Chinese culture and it’s interaction with foreign influences on a national basis.

During the China Briefing 2007 series of covers, we wanted to push this point home, and emphasize the importance of understanding and appreciating Chinese culture in a business environment. Most magazines and books about business law and tax are rather dull; pictures of money, harassed looking executives or standard images of the Great Wall or new skyscrapers in Shanghai. We wanted to get away from that, and to that end we commissioned a series of contemporary Chinese artists, some of them very well known, to produce a series of covers for the 2007 China Briefing magazine. Some of these works have fetched extraordinary amounts at auction, and the “Business Art” series has been well received. It will continue into 2008 as we further express the importance of having an understanding of Chinese culture when conducting business in the country. It is a key component of any consulting practice – they must have an appreciation of Chinese culture.

We’re proud of these covers, showcasing contemporary Chinese artists, and we reproduce the 2007 cover series for you here, with each artists name and location besides. Works by these artists have generally been provided by galleries at the 798 Compound in Beijing.

China practice management: Keeping staff happy
(excerpt from chapter six, circa 2005)

One of the key aspects behind running a developing and successful firm is of course it’s people. At Dezan Shira & Associates, we have always ensured our staff are well looked after, and there are several ways in which we do this. A decent work environment is essential; all our offices are in Grade A buildings, furnished with decent work stations, plenty of natural light, and with Chinese cultural paintings, antiques and plants throughout. Each office also maintains a library – both business law, tax and cultural, and has its own well stocked pantry and washrooms. The firm buys all its staff lunch daily and pays for all travel and out-of-pocket expenses when needed on client visits.

Monthly get togethers are held in each office at every month’s end, at which staff whose birthdays fell during that month are honored, staff with new babies, and new staff joining the firm are all introduced and welcomed and cakes and cookies shared. Additionally, each office has a series of technical updates, sometimes linked with other offices via phone or video, to discuss and learn about new aspects and developments in China legal and tax issues. It is important the knowledge base is expanded and shared throughout all employees, and these sessions take place in various disciplines nearly every week in each office.

The firm also pays staff well, at levels commiserate with the Big Four, and has an extensive employee benefit scheme. We are generous with holidays, and do look after staff with problems, be they medical or relocation issues. We also pay great attention to meeting payroll on the nose; on the last day of every month the payroll is met, in full. Welfare contributions are also paid in full – an expensive issue in China, where mandatory welfare for employees can be equal to as much as 60 percent again of their salary. We know many businesses skimp on this, but this is a false economy as well as being illegal. Being responsible and mature when running a practice means meeting all your staff overheads, and we attach great importance to this.

Decisions made by the firm are almost always carried out by an executive committee, which varies in nature and composition depending upon the subject matter. So an IT committee exists, tax, audit, legal, marketing, business development and so on, and all aspects pertinent to the subject matter are shared and openly discussed. Consensus is usually reached then by a democratic basis with the board (equity partners) then having been able to have had the ability to listen to all points of view and implement decisions accordingly.

The firm also has fun – and arranges paid trips for staff on a regular basis. In fact the entire firm used to get together once a year in December, although this practice had to cease to logistical problems when moving over 100 staff around the country, such events are now regionalized. Typical office annual trips include the South China offices all traveling to Lijiang, the Beijing office enjoying the winter sun in Hainan, and the Shanghai office opting for Xishuangbanna in Southern Yunnan province. Other regional trips and getaways also take place during the year to boost camaraderie and staff development skills.

With about 10 percent of the firm being expatriate, we also have to look after their needs, which can be sometimes more boisterous than the local Chinese. It may not be a surprise to you to note that you may occasionally see Dezan Shira expatriate staff enjoying high jinks in a local bar!

Staff also need to be given the right equipment – Dell desk and lap tops are mandatory kit and all software is original and licensed. Anything less would compromise our integrity and IT systems, which when running a tax/audit practice and dealing with business finances, is essential. Firms that run inappropriate pirated software run a huge risk with their clients work.

Communications skills are also vital for us – in terms of Chinese staff, all have to be fluent in English (in addition of course to Chinese) in order to work for the firm. With an international client base, it is essential, and Dezan Shira & Associates may well be the only China practice with a 100 percent English fluency ratio amongst staff. For us it is a basic standard.

The firm’s hierarchy too is approachable, staff all address each other on a first name basis and ego and arrogance amongst individuals is not accepted. Such individuals do not fit into our corporate culture – teamwork is the key in China, and everyone has to fit in. It is part of the responsibility of managing the firm to ensure this happens – and we are lucky to have both the quality staff we have in place to service our clients in the most effective manner possible. It cannot be accomplished without teamwork, and that is what Dezan Shira & Associates largely is – a team of people, all working together, for the benefit our clients and to meet the firm’s goals.

The China Briefing blog has run excerpts from the newly released “The Story Of A China Practice” all week. Sales inquiries for the book should be made to sales@china-briefing.com. The entire series can be found here.