For multinationals, China cannot be replaced by India or Vietnam – Shaun Rein

 

Shaun Rein

Multinationals do not have to look at Vietnam and India as a replacement for China, says business analyst Shaun Rein at CNBC. In the next ten years China’s middle class is going to grow massively, and cannot be beaten by anybody else, he adds. “About 400 million poorer Chinese are getting into the middle class in the years to come,” he says.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touchmailto:fons.tuinstra@china-speakers-bureau.com or fill in our speakers’ request form.

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Cautious optimism about China’s economy in 2024 – Shaun Rein

 

China’s economy looks better for 2024, says business analyst Shaun Rein, as multinationals are moving back their investments to China away from other destinations. Both consumer confidence and real estate are still in bad shape, but sentiments are moving in the right direction, he says at CNBC, despite the geopolitical tensions with the US.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.

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What can multinationals learn from China this year? – Ashley Dudarenok

 

Ashley Dudarenok

Setting up solid eco-systems to facilitate your business, is what China’s companies do right when they go global and other multinationals can learn from them, says strategic advisor Ashley Dudarenok on her vlog. Especially European companies have a rather poor starting position, she adds.

Ashley Dudarenok is a speaker at the China Speakers Bureau. Do you need her at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.

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The Kennedy bill has unintended consequences for MNC's - Paul Gillis

Paul Gillis

US legislators are preparing a law to allow US PCAOB inspectors to check US-listed Chinese firms. But - warns auditing expert Beida professor Paul Gillis - the so-called Kennedy law might have unintended consequences for all multinational companies, he writes on this Chinaaccountblog. 

Paul Gillis:

The bill essentially bans trading in companies whose auditors are not able to be inspected by the PCAOB. The bill is limited to covered issuers (essentially any public company) that are audited by an auditor with a branch or office in a foreign jurisdiction that does not allow inspections. 

Those definitions obviously bring most US listed Chinese companies under the jurisdiction of the Kennedy Bill. They are public companies and are mostly audited by the Chinese member firms of the Big Four accounting firms. 

But what about multinationals like IBM? IBM is audited by the US firm of PwC which uses PwC Zhong Tian CPAs, its China firm, to audit China operations.  PwC Zhong Tian is a Chinese limited liability partnership, not an office or branch of the US firm. The Big Four accounting firms are structured more like a franchise operation than an MNC.  Local operations tend to be owned by local partners.   On its face, I don’t think that Big Four firms in China constitute a branch or office of the US firm. This is not an insignificant point. The PCAOB has identified 207 multinationals where it can inspect some, but not all of the audit. 

I don’t think the Kennedy bill is intended to impact MNCs, and based on my analysis in the previous paragraph, I don’t think it does. However, Big Four firms would be wise to carefully review existing business operations to make sure the US firm has not inadvertently established a branch or office in China. I know many of the Big Four firms in China have seen firms in their network sneaking into China to do projects. There will be heightened concern over these activities out of fear they could be treated as a branch or office that would result in serious problems for their multinational clients, even where the activities of that branch or office had nothing to do with the audit.

More at the China Accounting Blog.

Paul Gillis is a speaker at the China Speakers Bureau. Do you need him at your (virtual) meeting or conference? Do get in touch or fill in our speakers' request form.

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Multinationals underestimate local Asian competition - Shaun Rein

Shaun Rein

Multinationals knew they were up for a hard time in fighting local brands in China, but local brands all over Asia are becoming more successful, says business analyst Shaun Rein to Industry Week. Consumers are changing their preferences to local brands.

Industry Week:

Nestle SA is losing buzz to an Indonesian coffee brand famous for brewing civet-cat feces, and L’Oreal SA is losing face to a Chinese skincare brand favored by President Xi Jinping’s wife.

Asia traditionally was considered easy money for Western multinationals, with beverage makers, cigarette brands and fast-food giants capitalizing on rising incomes and weak local competitors. A survey by China Market Research Group in 2011 showed 85% of Chinese consumers preferring foreign brands. 

Those days are over. That preference dropped by half last year, and it goes beyond China: brands of Indian toothpaste, Vietnamese laundry detergent and Japanese flavored water are picking up market share with lower prices and by catering to local tastes. 

Rising stars such as Indonesia’s Luwak instant coffee and China’s Pechoin moisturizers spell trouble for global titans at a time when Asia-Pacific’s economic growth is projected to outpace the world’s through 2019. 

“Multinationals underestimated local competition,” said Shaun Rein, managing director for China Market Research Group. “Local players have moved very fast on emerging trends that multinationals have missed, like healthy and e-commerce.”

More in Industry Week.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Multinationals: losing to local brands - Shaun Rein

Shaun Rein

Multinationals are increasingly losing markets to local competitors, says business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order to Bloomberg, and founder of the China Market Research Group. “Multinationals underestimated local competition,” said Shaun Rein.

Bloomberg:

Asia traditionally was considered easy money for Western multinationals, with beverage makers, cigarette brands and fast-food giants capitalizing on rising incomes and weak local competitors. A survey by China Market Research Group in 2011 showed 85 percent of Chinese consumers preferring foreign brands. 

Those days are over. That preference dropped by half last year, and it goes beyond China: brands of Indian toothpaste, Vietnamese laundry detergent and Japanese flavored water are picking up market share with lower prices and by catering to local tastes. Rising stars such as Indonesia’s Luwak instant coffee and China’s Pechoin moisturizers spell trouble for global titans at a time when Asia-Pacific’s economic growth is projected to outpace the world’s through 2019. 

“Multinationals underestimated local competition,” said Shaun Rein, managing director for China Market Research Group. “Local players have moved very fast on emerging trends that multinationals have missed, like healthy and e-commerce.”

More in Bloomberg.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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A rocky road for multinationals amid China´s slowdown - Sara Hsu

Sara Hsu

China´s farewell to double-digit growth is causing multinational companies headaches, also in the services industry where China is heading to, writes financial analyst Sara Hsu in the Diplomat. Now the downturn seems manageable, but she sees a rocky way ahead.

Sara Hsu:

However, the road ahead looks rocky. Multinationals have attempted to maintain profitability despite slowing revenue growth. Profits have declined most starkly in the manufacturing sector. Multinationals that had been faced with rising costs in the eastern coastal regions of China reaped the gains of moving to China’s interior, but this practice has been exhausted. Rather than focusing on conquering new markets or relocating to low-cost regions, multinationals have to do the hard work of improving managerial and productive efficiency. 

Meanwhile, service sector MNCs are unable to participate extensively in Chinese markets, since services sectors such as the financial and telecommunications sectors remain relatively closed off to foreign companies. It is not clear when these industries will be further opened up, despite the intentions of the Chinese leadership to increase output in the services sector. Unlike the manufacturing sector, tertiary industry has not made much room for foreign competition due to existing inefficiencies and government protection, and there is no guarantee that this will change in the near future. 

China holds many prospects for multinationals, as urbanization and consumer demand increase. The country continues to grow at a faster clip than most of the rest of the world.  

As conditions change, business strategies and processes must become more sophisticated than ever to compete. Businesses seeking to reach consumers in lower-tier cities, for example, may be assisted by local partners in order to gain traction in these less accessible locations. Multinationals must increasingly compete in marketing and selling products, as well as in creating new products, to compete against domestic Chinese firms. Investing in sectors that the government currently favors is necessary, as long as foreign competition is embraced. 

China will likely continue to be an important base for multinationals, even though all low-hanging fruit has been picked, at least until the service sector is liberalized. The country’s connectivity to the rest of Asia, its large and increasingly sophisticated urban consumer base, and its potential growth preserve China’s attractiveness to multinationals, even in the face of somewhat waning economic activity. To survive, these businesses will have to bring their A-game to China’s increasingly challenging business sphere.

More at the Diplomat.

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